Benefits of approved superannuation funds.

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....benefits of approved superannuation funds in contravention of rule 86 of the Income-tax Rules, 1962 were allowed deductions under section 80C on their contributions. This matter has been examined in consultation with the Ministry of Law. 2. According to rule 86 of the Income-tax Rules, 1962, a director of a company can be admitted to the benefits of an approved superannuation fund only if (i) h....

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....be merely described as an employee on paper. Thus a person who is an employee-director of more than one company cannot be held to be a whole-time bonafide employee of any one of the companies within the meaning of rule 86 and as such is not entitled to participate in the superannuation funds of any of these companies. However, a director who is a whole-time bonafide employee of a company, can be a....

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.... 86 to the superannuation fund, (a) in the hands of the director, and (b) in the hands of the company. As regards (a), such contributions cannot be considered as income of the year in the hands of the director because he does not acquire any vested right in the amount. However, the amounts as and when they fall due shall be treated as income liable to tax and no exemption u/s. 10(13) will be avail....