POSTED BY May 16, 2013 1:29 pm COMMENTS (3)ON
Dear Manish and all learned members of Forum,
I have a query on taxation of the commutation amount of LIC Superannuation Scheme of my friend Anil:
Anil worked in a Co. for about 4 years and was covered in employer Superannuation scheme with LIC. He resigned and joined some other co. which did not have Superannuation Scheme. Anil let his fund remain with previous employer LIC superannuation fund for more than 10 years. Every year interest was credited to Anil membership a/c. Anil is now retiring from the service from his current employer as he has attained the age of 60 years. As per previous employer scheme, supperannuation age was 58 years. Anil requested now to his previous employer by filling the prescibed proformas about his intension:
1. To commute the accumulated amount to the extent permitted as tax free by Income Tax deptt.
2. To start the annuity from 01.04.2013
The dealing officer in P&GS section of LIC informed as under:
1.The commuted amount will be fully taxable. It does not make any difference from tax point of view if the amount was allowed to remain with the previous employer for more than 10 years or so or the request for commutation/start of annuity was made after attaining the age of 60 years. Since Anil left the previous employer by “Resignation” and not on “Retirement” after attaining the age of 58 years, Anil can not get tax free commuted amount ( 1/3 rd amount is approx Rs. 4 lacs ) as it is more than free tax free limit of Rs. 2.50 lacs (for senior citizen).
2. LIC officer further says that annuity will be given from the date of leaving the previous employer as arrears and not from current date
I need the advice from dear Manish and all the knowledgable members :
1. Whether the views expressed by LIC officer are correct or not as per the current provisions of Income tax Act. If not pls. advise what documentry evidence is there to show him that his views are not based on correct interpretation of Income tax Laws.
2. Why can’t annuity be started from the current date when the application is being made now to LIC/previous employer.
I have gone thro’ your web site and some others as well, but this issue has not been raised anywhere and therefore submitted for the response of enlightened people like you.