Page 95 - IC23 life insurance application

3) In terms of section 10 (13) the following types of benefits paid to the

employees/members out of approved superannuation fund are not taxable:

a) Benefit payable on death of a member.

b) Benefit paid in lieu of commutation of annuity on his retirement or after a

specified age or on his becoming incapacitated prior to such retirement.

c) Refund of contributions on death of a member.

d) Refund of contributions to an employee on his leaving the services in connection

with which the fund is established otherwise then by retirement at or after a

specified age or on his becoming incapacitated prior to such retirement to the

extent to which such payments does not exceed the contribution made prior to

the commencement of the act and any interest thereon.

4) Rule 90 of the Income Tax Rules 1962 provides for tax free commutation of

pension @ 1/3 of the accumulation if the employee is entitled to gratuity and 1/2

in other cases.

5) The Employee's contribution to approved superannuation funds are eligible for tax

relief under section 88 of Income Tax Act 1961 in the same manner as Insurance

Premium, Provident Fund contribution etc.

GRATUITY FUND

A Gratuity Fund approved under Part 'C' of the Fourth Schedule of Income Tax Act

1961, the taxation aspects from the point of view of the Employer, Trustees and

Employees are as under.

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