Regarding income tax on commuted pension.

I am a pensioner from Himachal Pradesh State Electricity Board Ltd; retired on superannuation. I have commuted 40% of my pension. Now  HPSEB Ltd. is taking gross pension amount every month for calculation of TDS.  "But as I studied the provision contained in section 10(10 A) of the IT act, the amount of the commuted pension is fully exempted. As such only the Net Pension (Gross pension - commuted pension) shall be considered for the purpose of income tax computation." 

Now I am in confusion, whether gross pension  amount shall be considered for the purpose of TDS   or the net pension amount. Please help clarifying the confusion.

Replies (3)
Commuted pension or lump sum received may be exempt in certain cases.For a government employee, commuted pension is fully exempt.For a non-government employee, it is partially exempt.If Gratuity is also received with pension – 1/3rd of the amount of pension that would have been received if 100 of the pension was commuted is exempt from commuted pension and remaining is taxed as salary.And in case only pension is received, gratuity is not received – ½ of the amount of pension that would have been received if 100 of the pension was commuted is exempt.

Sir,

In fact I retired from HPSEB Ltd; which is an other than govt. organization. I received one time full gratuity at the time of retirement. I commuted 40% of my total pension and received one time commuted pension amount at the time of retirement. Now my employer is making recovery  of commuted pension in monthly installments as under:

Monthly total pension:                     Rs.20000/-

Monthly commuted pension:           Rs.8000/-

Monthly net pension received:        Rs.12000/-

Now the confusion is:

i) Whether total monthly pension i.e. Rs.20000/- shall be considered for computing income tax or net pension i.e. Rs.12000/-.

ii) Whether commuted pension is income tax exempted under IT section 10(10A).

Since my employer is affecting TDS on total monthly pension Rs.20000/-.

Please clarify.

 

Hi Suresh ji,

My cobrother also retired from HPSEB in July 2017. He has also availed commuted pension facility. I want to file his return due to his serious ailment. Could you please answer if HPSEB Ltd commuted pension is 100% tax free or not?

Regards

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