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For commuted EPS, does law 10A speak of the EPS+gratuity at the time of payment?

Tax queries 252 views 1 replies

According to Chapter III, Section 10, 10A(ii):

any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed—

(a)  in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

(b)  in any other case, the commuted value of one-half of such pension,

such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality ;

When I left a company 7 years ago, after 7 years of service, they paid me a gratuity at my time of leaving, and it was fully taxable. I am less than 40 years old. Last year I withdrew the EPS (note that this is not EPF) from what that company had deposited with the EPFO. So assuming that the EPS I withdrew is a commuted pension, do I declare 1/3rd or 1/2 of the amount as exempt income when filing my returns? I'm confused because the gratuity was paid as a separate payment many years ago.

Replies (1)

From what I've understood from the law, the gratuity matters only if it was paid in the same financial year as the commuted pension amount.


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