Taxability of Commuted Pension and gratuity

Can anyone let me know something about commutation of gratuity.

i heard soething about it not exactly able to get any writeup on same

Dear Rahul,

In the case of Govt employees both are exempt.

Please specify whether the employee is a Govt. employee or Non-Govt employee.

In the case of Non-Govt employees TDS will be deducted only on the taxable portion of Commuted Pension and Gratuity and the same will be deducted on the basis of slab rates.

Dear Saurabh,

Commutation is nothing but capitalised value of Pension.

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If you get commuted your full pension and encash it   

50% of the amount will be treated as taxable income,

in case no gratuity is being received by you.

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If Gratuity is also there, then two third of the amount will be taxable.

Example :

Suppose one person is getting  12000/ per month as pension. (This is called  non -commuted pension). It is taxable as salary income for all types of employees.  

If he wants to get commuted his 40% of pension against that he can take lumps sum cash of

say 400000/- . His full commuted value of pension   400000/40% .....  will be..... 10,00,000/-.

Then onwards he will get 60% of his pension i.e. 7200/- per month.

 If the assessee is also in receipt of Gratuity

Exempted Pension will be  333333/ (i.e. 1/3rd of 10,00,000)

and taxable amount of commuted pension will be (400000-333333)=66667

Gratuity is not like pension. It's generlaly one time payment at the time of retirement.

Sir, 

Is 1/3  commutation (receiving gratuity) taxable for LIC Group Super annuation -  (contribution paid entirely by employee only) .   Resigned from Private firm after 10+ years of contribution to the fund.

LIC has deducted 30% tax on my commutation. (say  1 Lac Tax levied  on 3 lacs commuted pension) 

Can I show the entire Commutation [3 Lacs] under ITR-2 > EI Sheet > Other Exempt income.. & claim refund.

Kindly reply as due date is nearing. Thanks.