Income Tax on Commuted & Uncommuted Pension | H&R Block

Income Tax on Pension – H&R Block

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Income Tax on Pension – H&R Block

Taxation does not retire with retirement of an employee, it is always applicable till the time he earns Income. After retirement employee receives income in the form of pension and other benefits like Gratuity etc. In this article we have explained the taxability of pension received by a retired individual.

In taxation, pension is classified in 2 types:

  • Commuted Pension which is lump sum payment received at the time of retirement
  • Uncommuted pension which is monthly pension received by employee after retirement.

Taxability on these 2 types of pension is discussed below:

  • Commuted Pension:-
  1. Commuted Pension received by Government employees is not taxable.
  2. Non government employees, who receive Gratuity along with Commuted Pension, get a tax exemption of up to 1/3rd of the total amount so commuted.
  3. Non government employees who do not receive Gratuity, exemption amount from tax is 1/2 of the total Commuted Pension received.
  • Uncommuted Pension:-
  1. Monthly pension received by an employee is taxable.
  2. Uncommuted Pension received from UNO by an employee or his family is not taxable.
  3. Family pension received by the family of armed force employee after his death is exempted from tax.
  4. Family pension received after the death of the employee is taxable as ‘Income from Other Sources’. 1/3rd of the pension amount or Rs. 15,000/-, whichever is lower, is exempt from tax.
HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

6 Comments

  1. Yuvraj Singh says:

    Hi All!!!

    Just wanted to know if any lumpsum amount is received from unicef as a pension (rprobably commuted pension) is it taxable, as pension received from unicef is not taxable at all.

    Thanking you
    Yuvraj Singh

  2. O P Malik says:

    First time AMT recd through monthly is taxable

  3. Kundan says:

    My pension is coming in my AC is Rs.XXX and Rs.YYY is deducting by BiharGovt before depositing in account as Loan is taken on the pension. So in my AC only Rs.XXX is coming but my Total Pension is XXX+YYY. So for Income Tax my amount will XXX or XXX+YYY?

  4. Chetna Joshi says:

    Want to know how is monthly pension taxable

  5. Rajendra says:

    Want to know how much pension received from the pension fund department for Non government employee if he completed service minumum 20 plus years.

  6. Rahul Saha says:

    Thanks a lot..
    This article helped me a lot 🙂

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