TDS BY BANKS FOR MP PENSION PAID BY THEM
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 February 2010
WHETHER TDS IS DEDUCTABLE FROM THE PENSION PAID TO EX-MPS BY NATIONALISED BANKS, IF YES AT WHAT RATE
03 February 2010
Yes. Applicable, rates as Section 192
04 February 2010
CBDT vide circular No. 771 dt. 3/11/98 says that in the case of pensioners receiving pension through nationalised banks, provisions of TDS are applicable in the same manner as they apply to the salary income.
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 February 2010
pension received from ex-mps are not treated as salaries/other gove pensions as they are not govt employees hence it is treated as other income. If tds is deductable is it on the whole amount of pension without allowing deduction of Rs.1.6 lak and 1lak under 80c as in the case of salaries
27 July 2025
Here’s the detailed position on **TDS by banks on pension paid to ex-MPs (Members of Parliament):**
---
### 1. **Is TDS deductible on pension paid to ex-MPs by banks?**
* **Yes**, banks deduct TDS on pension payments made to ex-MPs.
* However, the **nature of pension payment to ex-MPs is different** from salary or government pension.
* Ex-MPs are **not government employees**, so their pension is **not considered ‘salary’ income** under Income Tax Act.
* Instead, this pension is treated as **‘Income from Other Sources’** (Section 56 or 56(2)(vii)).
---
### 2. **Applicable TDS Section and Rate**
* For pension treated as **salary income**, TDS is deducted under **Section 192**.
* For pension to ex-MPs (non-salary income), TDS is deductible under **Section 194R (or earlier relevant sections related to other income)**, but practically banks often deduct under Section 194R or similar provisions applicable to income other than salary.
* The rate applicable will be as per **income tax slab** of the recipient or **rates prescribed for other income** (usually 10% or as per relevant section).
---
### 3. **Whether deduction of exemption (Rs. 1.6 lakh standard deduction or Rs. 1 lakh under 80C) is allowed before TDS?**
* **No deduction/exemption is allowed at the time of TDS deduction.**
* TDS is deducted on the **gross pension amount paid**.
* Exemptions such as **Standard Deduction (Rs. 50,000 now)** or **Section 80C deductions** are **allowed only at the time of filing Income Tax Return**, not at the TDS stage.
* Hence, banks deduct TDS on the **full pension amount paid**, without reducing for exemptions.
---
### **Summary Table:**
| Parameter | Ex-MP Pension | Government Pension / Salary Pension |
| ---------------------------------- | ----------------------------------------------------------- | ----------------------------------- |
| Nature of Income | Other Income (Non-salary) | Salary Income |
| TDS Section | Relevant other income section (e.g., 194R) or as applicable | Section 192 |
| TDS Rate | As per slab or prescribed rate | As per slab or prescribed rate |
| Deduction of exemptions before TDS | No | No |
---
### **Additional notes:**
* Since TDS is deducted on gross amount, the ex-MP should claim eligible deductions/exemptions while filing Income Tax Return.
* If excess TDS is deducted, refund can be claimed in the return.
---
If you want, I can help you draft a note or an advisory letter explaining this to your bank or pension disbursing authority.
Would you like that?
---
### 1. **Is TDS deductible on pension paid to ex-MPs by banks?**
* **Yes**, banks deduct TDS on pension payments made to ex-MPs.
* However, the **nature of pension payment to ex-MPs is different** from salary or government pension.
* Ex-MPs are **not government employees**, so their pension is **not considered ‘salary’ income** under Income Tax Act.
* Instead, this pension is treated as **‘Income from Other Sources’** (Section 56 or 56(2)(vii)).
---
### 2. **Applicable TDS Section and Rate**
* For pension treated as **salary income**, TDS is deducted under **Section 192**.
* For pension to ex-MPs (non-salary income), TDS is deductible under **Section 194R (or earlier relevant sections related to other income)**, but practically banks often deduct under Section 194R or similar provisions applicable to income other than salary.
* The rate applicable will be as per **income tax slab** of the recipient or **rates prescribed for other income** (usually 10% or as per relevant section).
---
### 3. **Whether deduction of exemption (Rs. 1.6 lakh standard deduction or Rs. 1 lakh under 80C) is allowed before TDS?**
* **No deduction/exemption is allowed at the time of TDS deduction.**
* TDS is deducted on the **gross pension amount paid**.
* Exemptions such as **Standard Deduction (Rs. 50,000 now)** or **Section 80C deductions** are **allowed only at the time of filing Income Tax Return**, not at the TDS stage.
* Hence, banks deduct TDS on the **full pension amount paid**, without reducing for exemptions.
---
### **Summary Table:**
| Parameter | Ex-MP Pension | Government Pension / Salary Pension |
| ---------------------------------- | ----------------------------------------------------------- | ----------------------------------- |
| Nature of Income | Other Income (Non-salary) | Salary Income |
| TDS Section | Relevant other income section (e.g., 194R) or as applicable | Section 192 |
| TDS Rate | As per slab or prescribed rate | As per slab or prescribed rate |
| Deduction of exemptions before TDS | No | No |
---
### **Additional notes:**
* Since TDS is deducted on gross amount, the ex-MP should claim eligible deductions/exemptions while filing Income Tax Return.
* If excess TDS is deducted, refund can be claimed in the return.
---
If you want, I can help you draft a note or an advisory letter explaining this to your bank or pension disbursing authority.
Would you like that?
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