Question
What is a superannuation fund and how is it taxed?
Answer
Bottom line: A superannuation fund is an employer retirement benefit; the employer's contribution is tax-free up to a combined ₹7.5 lakh.
1. The cap
Employer contributions to PF, NPS and superannuation together are tax-free up to ₹7.5 lakh a year; the excess is a taxable perquisite.
2. Accretion
Interest earned on the excess is also taxable.
3. Pension drawn
The pension you later draw from the fund is taxed as salary.
Project retirement savings with our NPS Calculator.
This answer is general information based on the law as it stood when written and is not professional advice on your specific situation. Verify the current position and consult a qualified professional before acting. See our disclaimer.