Pension receipt by widow under eps - 1995 scheme.
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 July 2013
Whether pension received by widow from Employees Provident Fund Organization under EPS - 95 scheme is excluded under any sect. of Indian Income Tax Act?
Or will be taxed as receipt of family pension.
2) Arrears of salary received after death of husband after a year of death pertaining to life period of deceased husband will be taxable in hands of widow? Husband was expired during FY 11-12, and salary is received during FY 12-13.
Kindly highlight with specific provision.
Or will be taxed as receipt of family pension.
2) Arrears of salary received after death of husband after a year of death pertaining to life period of deceased husband will be taxable in hands of widow? Husband was expired during FY 11-12, and salary is received during FY 12-13.
Kindly highlight with specific provision.
25 August 2013
Money received against PF is not taxable
But the salary received after death is taxable. An amount earned by a person during his lifetime is taxable in the hands of the legal representative under Sec. 159 of the Act. In the reader's case, the reader is a legal representative, who is obliged to pay tax, because she is "deemed to be an assessee" under Sec. 159(3) of the Act, in respect of the income assessable in the hands of her husband in like manner and to the same extent as the deceased. Normally, this provision applies to a case, where the amount was due to deceased during his life time but received after his life and not to amount, to which he could not have laid a claim during his life time.
The income in the reader's case has accrued after death on sanction of arrears after refixation of pay after his life time, so that liability to tax arises only in the year in which the arrears are sanctioned/received. On the date on which the amount had become due, the assessee was not alive. In this context, Sec. 159 would have no application. In the hands of the reader, she receives it no doubt as successor, but accrual of income is after death, so that it cannot be treated as arising out of employment, because there is no employer-employee relationship between the employer and the deceased or as between the employer and the reader on the date of accrual. It can have only the character of a capital receipt in her hands, as it had become due after his death. In other words, since the amount had accrued after the lifetime of the employee, it is not assessable as income of the estate of the deceased. On the other hand, if it is treated as salary relating to service during his life time quantified after death, liability as salary can be inferred.
The Board had taken the view that amount accruing after death is not taxable in respect of leave encashment in Circular No. 309 dated July 3, 1981 (1981) 132 ITR (St.) 321. In the case of gratuity payment, a decision was rendered by the Tribunal that it would not be taxable, where it is payable to the widow on the death of her husband in Smt. L.K.Thangammal v Third ITO (1982) 1 ITD 762 (Mad).
It may, therefore, be possible to take the view that the amount cannot be taxed as legal representative of the deceased. Where the employee had retired in 1992 and died in 1997, while the arrears became due in 1999 after announcement of Fifth Pay Commission, if at all, it is assessable as income of the legal heirs in their own hands, but in the hands of the legal heirs, it can have only character of a capital receipt. It is presumed that tax has not been deducted at source from the payment. If it is so deducted, a return may be filed in the name of the person in whose name TDS certificate is issued and file return claiming refund on the ground that the receipt is non-taxable. Even if tax has not been deducted, it is advisable that the reader files a return and stakes a claim for exemption along with facts of the case, so as to avoid any hassles in the future.
But the salary received after death is taxable. An amount earned by a person during his lifetime is taxable in the hands of the legal representative under Sec. 159 of the Act. In the reader's case, the reader is a legal representative, who is obliged to pay tax, because she is "deemed to be an assessee" under Sec. 159(3) of the Act, in respect of the income assessable in the hands of her husband in like manner and to the same extent as the deceased. Normally, this provision applies to a case, where the amount was due to deceased during his life time but received after his life and not to amount, to which he could not have laid a claim during his life time.
The income in the reader's case has accrued after death on sanction of arrears after refixation of pay after his life time, so that liability to tax arises only in the year in which the arrears are sanctioned/received. On the date on which the amount had become due, the assessee was not alive. In this context, Sec. 159 would have no application. In the hands of the reader, she receives it no doubt as successor, but accrual of income is after death, so that it cannot be treated as arising out of employment, because there is no employer-employee relationship between the employer and the deceased or as between the employer and the reader on the date of accrual. It can have only the character of a capital receipt in her hands, as it had become due after his death. In other words, since the amount had accrued after the lifetime of the employee, it is not assessable as income of the estate of the deceased. On the other hand, if it is treated as salary relating to service during his life time quantified after death, liability as salary can be inferred.
The Board had taken the view that amount accruing after death is not taxable in respect of leave encashment in Circular No. 309 dated July 3, 1981 (1981) 132 ITR (St.) 321. In the case of gratuity payment, a decision was rendered by the Tribunal that it would not be taxable, where it is payable to the widow on the death of her husband in Smt. L.K.Thangammal v Third ITO (1982) 1 ITD 762 (Mad).
It may, therefore, be possible to take the view that the amount cannot be taxed as legal representative of the deceased. Where the employee had retired in 1992 and died in 1997, while the arrears became due in 1999 after announcement of Fifth Pay Commission, if at all, it is assessable as income of the legal heirs in their own hands, but in the hands of the legal heirs, it can have only character of a capital receipt. It is presumed that tax has not been deducted at source from the payment. If it is so deducted, a return may be filed in the name of the person in whose name TDS certificate is issued and file return claiming refund on the ground that the receipt is non-taxable. Even if tax has not been deducted, it is advisable that the reader files a return and stakes a claim for exemption along with facts of the case, so as to avoid any hassles in the future.
Message likes :
1 times
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 August 2013
After death of husband salary arrears are received. Husband was having F D with bank, the accrued int. till date of death was shown in return of deceased by his L/H and claimed the TDS credit, and int. after date of death was included ion return of L/H.
In subsequent of death of husband TDS is made by bank till date of maturity of FD.
Under the circumstances, can return be filed in name of deceased by L/H showing income from arrears and claiming TDS on FD with note in return that int. is included in income of L/H, but TDS is done in name of deceased hence claimed in this return.
Kindly suggest.
Thanks, Sir- for your valuable opinion.
In subsequent of death of husband TDS is made by bank till date of maturity of FD.
Under the circumstances, can return be filed in name of deceased by L/H showing income from arrears and claiming TDS on FD with note in return that int. is included in income of L/H, but TDS is done in name of deceased hence claimed in this return.
Kindly suggest.
Thanks, Sir- for your valuable opinion.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Under construction property in ITR
- Gift of mutual fund units to daughter
- PPF interest-As Exempt Income disclosure
- Not able to file ITR
- Upload Level ValidationITR3Category of Defect B/D
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Building tax payment deduction in rental Income
- Pass word to open justification report for Q1 for FY 2026-27
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
