10 (23AAA) of Income Tax Act, 1961

1. Explore Tax Benefits 10 (23AAA) of Income Tax Act, 1961 Exemption to Employees Welfare Fund

2. Agenda • About Section 10 (23AAA) • Requirements to establish the fund • Benefits to Employer Company • Benefits to Employees • About us • Contact

3. About Section 10 (23AAA) • This section is inserted into the Act, with effect from 01-04-1996 • The total income of the fund established under a trust and evidenced by a trust deed, if approved by Commissioner or Director (Exemptions), as the case may be shall be exempt from taxes on income • The fund shall be established with the objectives, that are notified by central government, of {employee welfare or dependents of employees} who are members of the fund • The specified objectives notified are a) payments on superannuation b) payment for medical facilities c) payments at the time of death of member to the families etc • The contribution by members shall be periodical

4. Requirements to establish the fund • Trust Deed • Registration of Trust Deed (although not mandatory) • Employers contribution (although not mandatory) • Separate Bank Account for the fund as well as trust • Permanent Account Number for the trust • Defining periodicity • Defining quantum of contributions by members • Defining the rules for claims by members or their dependents • Appointment of auditor for the fund as well as the trust • Adherence to investment norms of the funds as per Income Tax Act, 1961

5. Benefits to Employer Company • Helping employees to form a mutual benefit fund in their own interest resulting in boost up of their morale • Can claim the contribution to the fund as business deduction • Reduce fringe benefit tax on medical facilities • Resorting to better ethical practice as this reduces false claims of medical bills / false declarations • This scheme amounts to self insurance of medical costs • Results in Collective bargaining benefit interms of medical costs

6. Benefits to Employees • Small periodical contributions result in countering huge medical costs • Self Management of funds although through Board of Trustees • Reduced fee and testing charges due to collective bargaining capacity • Need not worry about emergencies due to unforeseen / unwanted happens • Self insurance of one self and family

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