I have been employed with a company for a long time, and have accumulated approximately Rs 24 lakh in superannuation and Rs 9 lakh in gratuity. If I resign and take up a new job, will the superannuation and gratuity be taxed on transfer/withdrawal? To avoid tax, can I transfer these to the NPS while exiting the company?
Amit Maheshwari Tax Partner, AKM Global: Under Section 10(13) of the Income Tax Act, 1961, any payment from an approved superannuation fund on retirement is tax-exempt. However, if you withdraw the superannuation amount of Rs 24 lakh before retirement, it will be added to your taxable income and taxed as per your slab rate. You can transfer the balance to your new employer’s approved superannuation fund or the National Pension System (NPS), both of which are tax-exempt transfers. For gratuity, Section 10(10) allows an exemption of up to the lowest of Rs 20 lakh or 15 days’ salary for each year of service. Any amount exceeding this is taxable as per your slab rate. While gratuity cannot be directly transferred to the NPS, you can withdraw it, claim exemption, and invest the balance in the NPS to get additional tax benefits under Section 80CCD(1B). Transferring your superannuation to the new employer’s fund or the NPS, rather than withdrawing it, would be more beneficial.
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