17 February 2017
Your pension is taxed as your salary income in that the pension amount is taxed under the head salary in your Income Tax Return form. While pension is paid on a monthly basis, it can also be received as a lump sum in the form of commuted pension. On the other hand, pension paid on a periodical basis, known as uncommuted pension can be fully taxed as salary.In some cases, commuted pension may be tax exempt such as pension received by any of your family members (taxed under the head income from other source) if it is in the form of a lump sum payment. Likewise, uncommuted pension which is received by any of your family members is exempt up to Rs.15,000 or 1/3rd of the pension amount, whichever is less. However, any pension from the United Nations Organisation (section 2 of the UN privilege and immunities act, 1947) is exempt from tax as is pension received by kin of Armed Forces.Section 57 describes family pension as a monthly amount paid to a person belonging to the family of an employee by the employer in the event of the unfortunate demise of the former. Given that there is no employer-employee relationship in the said scenario, family pension is taxed asIncome from Other Sources
CAclubindia
