Rule 306: Limit on initial contributions to a superannuation fund for past service
Rule 306 caps the employer's initial contribution for past services for the deduction under section 29(1)(a). Rules 301 to 315 govern approved superannuation funds under Part B of Schedule XI to the Act. The contribution cannot exceed 27% of the employee's salary for each year of past service, reduced by employer contributions to a provident fund (recognised or not) for each such year, subject to any condition the Board specifies.
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Rule 306 - Initial contributions
For purposes of the deduction allowable under section 29(1)(a), subject to any condition which the Board may think fit to specify, the initial contribution of the employer to a superannuation fund for the past services of an employee shall not exceed the total of 27% of the salary of the employee for each year of past service, as reduced by the contributions of the employer to a provident fund (recognised or unrecognised), if any, for the same employee for each such year.
Rule breakdown
The cap
27% of salary for each year of past service.
Less employer PF contributions for each such year.
Subject to conditions the Board may specify.
Linked to the deduction under section 29(1)(a).
Key takeaways
Past service
Covers contributions for earlier years of service.
27% per year
Per year of past service.
PF set-off
Reduced by employer PF contributions.
Practical checklist
- Keep salary and PF records for past-service years.
Avoid
- Do not claim more than the per-year cap.
FAQs
What does Rule 306 apply to?
The employer's initial contribution for past services, for the deduction under section 29(1)(a).
What is the limit?
27% of salary for each year of past service, less employer PF contributions for each such year.
Can the Board add conditions?
Yes, the rule is subject to conditions the Board may specify.
Glossary
- Initial contribution
- Contribution for past services of an employee.
- Section 29(1)(a)
- Provision under which the deduction is claimed.