Deduction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2013 i took mu vrs in aug 2012,my retirment was due on dec 2012....i deposited amount in gpf,is the tax benefit available to me ,on the amout deposited in gpf,even after taking lumpsum amount of gpf on my retiremnt

CS, Deepak Pratap Singh

CS, Deepak Pratap Singh (Expert)
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12 January 2013 Dear Friend , The employee who opts for voluntary retirement is entitled to get forty five days emoluments for each completed year of service or monthly emoluments at the time of retirement multiplied by the remaining months of service before the normal date of service,whichever is less. Along with these benefits, the employees also get their provident fund and gratuity dues. Compensation received at the time of voluntary retirement is exempt from tax under section 10 (10C) of the Income Tax Act, 1961 upto the prescribed amount upon fulfilling certain stipulated conditions. However,the retiring employee should not be employed in another company or concern belonging to the same management.The amount of VRS is exempted to certain extent depending upon following criteria.
1. The amount of VRS received.
2. The Maximum amount decided by the government Rs. 10,00,000.
3. The amount calculated as above.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2013 sir can i show my amount deducted in gpf in 80c....??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 If you took Voluntary Retirement Scheme (VRS) in August 2012, and your retirement was due in December 2012, and you deposited an amount in your General Provident Fund (GPF), here are the tax implications regarding claiming deductions under Section 80C:

1. **Tax Benefit on GPF Deposit**:
- Contributions to GPF qualify for deduction under Section 80C of the Income Tax Act. This deduction is available for amounts deposited during the financial year (April to March).
- Since you took VRS in August 2012 and deposited an amount in GPF, you can claim a deduction for this contribution under Section 80C for the financial year in which the contribution was made.
- However, the amount you can claim as a deduction under Section 80C is subject to the overall limit of Rs 1.5 lakh per financial year, which includes other eligible investments and expenses.

2. **Treatment of Lump Sum Withdrawal**:
- If you withdrew a lump sum amount from your GPF upon retirement, this withdrawal is generally tax-exempt if certain conditions are met, such as having completed at least 5 years of continuous service.
- The tax exemption on GPF withdrawal is separate from the deduction under Section 80C for contributions made.

3. **Claiming Deduction under Section 80C**:
- Yes, you can show the amount deducted in GPF as a contribution under Section 80C, provided it was deposited during the applicable financial year(s).
- Ensure that you have documentary proof of the deposits made into your GPF account, such as contribution statements or receipts, which you may need to substantiate your claim if required by tax authorities.

**Important Considerations**:
- Contributions to GPF made during your employment period are eligible for Section 80C deduction.
- Lump sum withdrawals from GPF upon retirement are generally tax-exempt, subject to fulfillment of conditions.
- It's advisable to consult with a tax advisor or financial planner to ensure compliance with tax laws and to maximize your tax benefits based on your specific situation.

In summary, you can claim a deduction under Section 80C for the contributions made to your GPF account during the relevant financial year(s), even after taking a lump sum withdrawal upon retirement, provided all conditions are met as per the Income Tax Act.