Compensation of Interest on Delayed Payment of Pension /arrears of pension _RBI directive

No it is not taxable.

It is also less than basic exemption limit

Sir, 

Thanks for an quick reply. So it is confirmed that the said  payment is not taxable.  But again , I am confused. If basic exemption limit is exceed on account of such big amount of interest whta will be heppened to such family pensioner. Regards. 

I think it is not a capital receipt and is hence a taxable income.
it is just a payment for unduly holding payment/ not increasing payment for these many years. i dont see any merit to justify this as a capital receipt.

My sincere thanks to both of you. Regards.

It is not the taxable income in this year budget the financial authority has been decided that those persons who is senior citizen and having income from pension and interests are not taxable means they are not to file their income tax return in this case is the pension holder receive the payment for holding the pension so I think it is not taxable as it is related to pension and the income is also less this basic exemption limit

By no stretch of imagination can the compensation be equated with pension receipts. moreover for being in the nature of revenue receipt, this is well covered under the meaning of income.
the propsed amendment in the budget is only relieving senior citizens from filing of return. their income is still assessable under the act. relaxation was given only because tds is adequately deducted before paying pension and interest.

in this case the assessee is also receiving compensation, thus disentitled from availing such relief.