TAXABILITY OF PENSION RECEIVED CONSEQUENTLY AFTER HONORABLE APEX COURT ORDER

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Professors at Gujarat University retired in the 1980s, initially opting for a lump sum payment instead of a pension. After being denied a switch to the pension scheme, they successfully appealed to the Gujarat High Court and the Supreme Court. Now, they have received backdated pension payments with interest and are receiving monthly pensions. The key question is whether these accumulated pension payments and interest are taxable or exempt, and if they can be treated as commuted pension or arrears.

NIRMAL DAVE

NIRMAL DAVE (Querist)

01 August 2023 Dear All,

Professors in Gujarat university was given Two options by the Government for the payment at the time of their retirement in 1980s.

Option 1. Either to opt for Pension Scheme or

Option 2. Eligible for Lumpsum One Time Payment at the time of retirement.

They had selected Option 2 for lumpsum One time payment at the time of retirement.

Later on at the time of retirement They approached the government to switch over for pension scheme but Government did not allowed for the same.

After that They appealed the matter in Honorable Gujarat High Court and subsequently Honorable Supreme Court and both the Honorable Court gave decision in their favour.

Now, They Have received pension from their retirement year to till date in FY 2022-23 along with interest and from Jan'23 onwards They have started receiving monthly pension.

Whether such pension received from their retirement year to till date is taxable or exempt?

Can we claim the same as commuted pension or arrears of pension and claim the same as exempt?

Thanks & Regards
Nirmal Dave