Retirement Fund

Question 1

Exempt Retirement Payment under rule 20

Answer 1

-Accrued before act commencement
-Medical cost up to Rs. 1.8L

Question 2

TDS on payment by Approved Retirement Fund (Contributory/Govt.)

Answer 2

Amount Recievable
Less:
Higher of 50% of receivable or Rs. 5L

TDS @5%

Question 3

TDS on payment by Unpproved Retirement Fund

Answer 3

Amount Recievable - Contributed
TDS@5%

Question 4

TDS on Non-Contributory Payment:

Answer 4

Includes gratuity, VRS, medical costs, leave encashment
TDS: 15% (Final)

Question 5

Retirement Fund Payout Conditions

Answer 5

Employee retires
Beneficiary reaches 58 years
Death or permanent disability

Question 6

Conditions for Approval of Retirement Fund

Answer 6

-Funds must be invested in:
–CIT,
Gov. Bonds,
Banks,
Co-financing with banks,
Interest on beneficiaries

Minimum paid-up capital: 1 crore

At least 1000 beneficiaries

If contributions from employer is to be accepted, it should be independent to employer.

Retirement fund contributions debited in Ashadh should be deposited within 1month, debited in other month, with 15days

Arrangement for audit every year

Retirement Fund Payout Conditions
Employee retires
Beneficiary reaches 58 years
Death or permanent disability

Question 7

What if approved retirement fund becomes unapproved?

Answer 7

Tax 25% on computed income

Computation:
Income (as per objective) - Operating expenses
(+) Contributions received
(-) Retirement payments made