Dear Sir,Can superannuation fund be used by the employer or trust in other activities?
From India, Bharuch
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1From India, Bharuch
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when trust is formed for supperannuation, once employer desposit premium ,he has not right to ultilise the Fund
From India, Hyderabad
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From India, Hyderabad
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Mr. Nagi,
Please read the below article. How will the trusts meet the interest burden without investing anywhere?
The returns earned by private provident funds and superannuation funds from their investments in shares of companies will not attract income tax as the government plans to give such investments tax-free status, according to finance ministry officials. The finance ministry, which has allowed the entities to channelize up to 15% of their corpus in equities, is now set to amend the income-tax rules to facilitate this. The tax-free status would allow more retirement savings to flow into shares, which over a long period earn higher returns than other assets.
Private sector companies with more than a certain minimum number of employees can seek permission to manage the retirement savings of their employees instead of giving the corpus to the Employees' Provident Fund Organization, a government entity. The Central Board of Direct Taxes (CBDT) is likely to carry out necessary changes in the income-tax rules to allow private provident funds and superannuation funds to have their equity investments tax-free status. A finance ministry official, who did not wish to be identified, said the change in the rule could be done through a notification and would not require an amendment in the Income Tax Act. Changes in the Act can be effected by way of the legislative process, through the Finance Act in the Budget.
The Department of Economic Affairs (DEA) under the finance ministry had notified new norms for private provident fund trusts in August this year, permitting them to invest up to 15% of their corpus in the stock market instead of the earlier 5%. The new investment pattern comes into effect from April 1, 2009. The department of economic affairs has now written to the CBDT asking it to carry out amendments in its income-tax rules. Income-tax rule 67 prescribes an investment pattern for private provident funds and superannuation funds that is to be followed to avail tax benefits: income earned on investments that fall outside the prescribed pattern is liable to tax. Therefore, in the absence of tax-free status, even though a higher allocation for equities is allowed, the returns would have been subject to tax.
The official said that although most significant changes in the income-tax laws are made through the Finance Act, the CBDT will not wait for the Budget to effect the amendment. With the present government's term ending in May, there may not be a full-fledged Budget 2009. The new investment norm prescribed by the DEA will come into effect from April 1, and trusts following it will not be able to avail tax benefits since it would be a deviation from the income-tax guidelines. The move to allow tax benefits for equity investments by private provident funds and superannuation funds would facilitate more retirement savings to flow into the stock market and help deepen it further.
From India, Lucknow
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Please read the below article. How will the trusts meet the interest burden without investing anywhere?
The returns earned by private provident funds and superannuation funds from their investments in shares of companies will not attract income tax as the government plans to give such investments tax-free status, according to finance ministry officials. The finance ministry, which has allowed the entities to channelize up to 15% of their corpus in equities, is now set to amend the income-tax rules to facilitate this. The tax-free status would allow more retirement savings to flow into shares, which over a long period earn higher returns than other assets.
Private sector companies with more than a certain minimum number of employees can seek permission to manage the retirement savings of their employees instead of giving the corpus to the Employees' Provident Fund Organization, a government entity. The Central Board of Direct Taxes (CBDT) is likely to carry out necessary changes in the income-tax rules to allow private provident funds and superannuation funds to have their equity investments tax-free status. A finance ministry official, who did not wish to be identified, said the change in the rule could be done through a notification and would not require an amendment in the Income Tax Act. Changes in the Act can be effected by way of the legislative process, through the Finance Act in the Budget.
The Department of Economic Affairs (DEA) under the finance ministry had notified new norms for private provident fund trusts in August this year, permitting them to invest up to 15% of their corpus in the stock market instead of the earlier 5%. The new investment pattern comes into effect from April 1, 2009. The department of economic affairs has now written to the CBDT asking it to carry out amendments in its income-tax rules. Income-tax rule 67 prescribes an investment pattern for private provident funds and superannuation funds that is to be followed to avail tax benefits: income earned on investments that fall outside the prescribed pattern is liable to tax. Therefore, in the absence of tax-free status, even though a higher allocation for equities is allowed, the returns would have been subject to tax.
The official said that although most significant changes in the income-tax laws are made through the Finance Act, the CBDT will not wait for the Budget to effect the amendment. With the present government's term ending in May, there may not be a full-fledged Budget 2009. The new investment norm prescribed by the DEA will come into effect from April 1, and trusts following it will not be able to avail tax benefits since it would be a deviation from the income-tax guidelines. The move to allow tax benefits for equity investments by private provident funds and superannuation funds would facilitate more retirement savings to flow into the stock market and help deepen it further.
From India, Lucknow
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Dear Sir,
The amount paid as a contribution to the Superannuation Fund can only be used for the purposes stated in the trust deed. Normally, they can be invested in the permitted investment avenues or paid as a premium for a superannuation policy to generate a return on the fund corpus.
In case you have any specific queries, we can help you. Please contact us at
or 09310270884.
Thanks & Regards,
Avika Kapoor
Manager-Business Development
E-173, Kalkaji, New Delhi - 110019
011-4055 3774
From India, New Delhi
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The amount paid as a contribution to the Superannuation Fund can only be used for the purposes stated in the trust deed. Normally, they can be invested in the permitted investment avenues or paid as a premium for a superannuation policy to generate a return on the fund corpus.
In case you have any specific queries, we can help you. Please contact us at
Thanks & Regards,
Avika Kapoor
Manager-Business Development
E-173, Kalkaji, New Delhi - 110019
011-4055 3774
From India, New Delhi
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Hello, sir,
I have been allotted with a work to find the best prospects for investing PF trust money in all four sectors i.e., central, state, PSU, and private bonds. Can you guide me on what investment pattern I should adopt and what all options can give me maximum yield?
From India, New Delhi
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I have been allotted with a work to find the best prospects for investing PF trust money in all four sectors i.e., central, state, PSU, and private bonds. Can you guide me on what investment pattern I should adopt and what all options can give me maximum yield?
From India, New Delhi
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Dear All,
First of all, the funds of the Superannuation Fund are handled by the Fund managers with the approvals of the Trustees and not by the Company. The funds are utilized according to the norms laid down in the Trust Deed and Fund Rules. Expenses of the Superannuation Fund such as the purchase of pension annuity, settlement of retiral dues, and investments are all done with the approval of the Trustees and are subject to audit. At the end of each financial year, after the audit, the trustees inform members about their accumulations in the Superannuation Fund if it is a Defined Contribution Pension fund. If it is a Defined Benefit Fund, no such statements are issued, but the total corpus has to be tallied at the time of the audit by showing investment scripts and bank balances.
All the superannuation funds which are administered in-house have to go through these processes. If the Superannuation fund is administered by LIC, then the Trustees remit the annual contribution to LIC, and LIC sends a statement to the Trustees every year showing the accumulations of each and every individual member. Therefore, the Company literally has no access to the money of the superannuation fund unless there is a nexus among the Trustees/Fund Manager and the Company.
From India, Calcutta
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First of all, the funds of the Superannuation Fund are handled by the Fund managers with the approvals of the Trustees and not by the Company. The funds are utilized according to the norms laid down in the Trust Deed and Fund Rules. Expenses of the Superannuation Fund such as the purchase of pension annuity, settlement of retiral dues, and investments are all done with the approval of the Trustees and are subject to audit. At the end of each financial year, after the audit, the trustees inform members about their accumulations in the Superannuation Fund if it is a Defined Contribution Pension fund. If it is a Defined Benefit Fund, no such statements are issued, but the total corpus has to be tallied at the time of the audit by showing investment scripts and bank balances.
All the superannuation funds which are administered in-house have to go through these processes. If the Superannuation fund is administered by LIC, then the Trustees remit the annual contribution to LIC, and LIC sends a statement to the Trustees every year showing the accumulations of each and every individual member. Therefore, the Company literally has no access to the money of the superannuation fund unless there is a nexus among the Trustees/Fund Manager and the Company.
From India, Calcutta
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