Income Tax on Commuted & Uncommuted 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.
H&R Block India
H&R Block India
H&R Block India is the subsidiary of the world's leading tax filing company, H&R Block, US. In India we provide online and personalised tax filing services for individuals, professionals and businesses. We also provide managed services for GST.

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. ps says:

    it is mentioned that “Uncommuted Pension
    received from UNO by an employee or his
    family is not taxable.”

    Here what dose UNO Stands for

    Is it United Nations Organization

  6. Vikashg says:

    In the question there was allowed to get a pension 10000/mnth commuted. 90000 find out total taxable pension

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