![]() ![]() How to reduce tax liability on your pension income? And in case only pension is received and gratuity is not received – ½ of the amount of pension that would have been received, if 100% of the pension was commuted, is exempt. If gratuity is also received with a pension – 1/3rd of the amount of pension that would have been received if 100% of the pension was commuted, is exempt from commuted pension and the remaining is taxed as salary.ī. A commuted pension for non-government employees is partially exempt depending on whether the gratuity is received or not:Ī. A commuted pension of a government employee is completely exempt from tax andģ. Uncommuted pensions are fully taxable as salary.Ģ. The pensioners may also opt for commuted pension, which is receiving a lump sum pension amount once every year, or they can receive it monthly (uncommuted).ġ. Private sector pension: Pension received from private companies is also taxable and must be included in ITR under the head "Income from salary." The employer will deduct TDS on the pension income, and the taxpayer must reconcile the TDS and file their ITR accordingly. The tax liability of family pension is based on the income tax slab rate applicable to the recipient. ![]() It is taxable under the head "Income from other sources" in ITR. Government pension: Pension received from the central or state government is fully taxable under the head "Salary" in ITR.įamily pension: Family pension is received by the legal heirs of a deceased person who was receiving a pension. ![]()
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