Home > Income Tax > Salary > Pension – Section 10(10A)

Pension – Section 10(10A)

Uncommuted pension i.e pension received in regular instalments is taxable for all employees.

Commuted means to pay in one time rather to pay in instalments.

Commuted pension is exempt from tax as per the following provisions:

Employees of Central Government, State Government, Local authority, statutory corporation

Commuted pension is fully exempt in hands of such employees.

Any other employee:

For any other employee the amount of exemption will be as follows.

Employee also receives gratuity – 1/3 of Commuted value of pension

Employee not receives gratuity – ½ of Commuted value of pension

Notes:-

If pension is partly commuted and partly uncommuted then each portion’s exemption is calculated accordingly.

Commuted value of pension = Pension received / % of pension commuted

Commuted pension received from pension fund established by LIC or any other approved insurer under section 10(23AAB ) is exempt from tax for all employees.

Pension  is taxable under the head Income from Salary. Family pension received by legal heirs is not income from salaries, it shall be taxed as “income from other sources”

 

About Rohit Pithisaria

Rohit Pithisaria is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He is actively writing from very beginning of his professional career and is author of various tax articles and blogs.

Leave a Reply

Your email address will not be published. Required fields are marked *

GST & Income Tax Fortnightly Magazine for CA/Tax Practitioners

Remain updated with latest tax laws





 
Subscribe Now
close-link