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Income Tax on Arrear Commutation Amount

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trnghosh

sr asst

210 Points Posted on 22 September 2021

I got some arrear commutation amount after retirement as my basic has been revised due to Bipartite settlement. So far my knowledge I know that commutation amount is non taxable but to my surprise my pension paying authority ( SBI) deduct tax on arrear commutation amount. Is that Ok?

Shall be glad if anyone give some idea on this.

Many thanks for your time.

T K Ghosh

Replies (4)

Quick Summary

A retired individual received an arrear commutation amount due to a revised basic pension following a Bipartite settlement. They were surprised to find that their pension authority, SBI, deducted tax on this amount, as they believed commutation is usually non-taxable. The discussion clarifies that commutation arrears can indeed be taxable under the 'Income from Other Sources' (IFOS) head, and relief under Section 89 may be available for the tax deducted on salary arrears by filing Form 10E.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121531 Points Posted on 23 September 2021

Seems to be salary arrears, as commutation pension amount is generally paid in single slot,

trnghosh

sr asst

210 Points Posted on 23 September 2021

It is not salary arrears, when I retire at that time some negotiation talks going on in between bank and IBA which is materialized later after my retirement. As a result my basic changed and the commutation amount which I got previous increased and I get salary arrear and commutation arrear as well. My question is about the second one commutation arrear and for that I asked here. Surprisingly the details of the credit also shows " XI Bipartite Commutation arrear".