Is there Income Tax on commuted pension of a government officer?

Tilak Marg Forum for Legal Questions Forums Taxation Laws Is there Income Tax on commuted pension of a government officer?

This topic contains 1 reply, has 2 voices, and was last updated by Dr. Ashok Dhamija Dr. Ashok Dhamija 1 year ago.

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  • #2013

    Anonymous
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    If I get commuted pension after my retirement (which is due in 8 months), do I have to pay income tax on the amount of commuted pension? If so, it will be a big amount since my commuted pension will be more than Rs. 10 lakh? If I have to pay income tax on this amount, then it will not be useful to take commuted pension. Please clarify. Thanks in advance.

  • #2052

    Commuted pension received by a Government servant is exempted from payment of Income Tax under the provisions of Section 10(10-A) of the Income Tax Act, 1961. So, you will not have to pay any income on receipt of the commuted pension. The relevant extract from this section is reproduced as under:

    10. Incomes not included in total income.—In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

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    (10-A)(i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or a corporation established by a Central, State or Provincial Act;

    (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;

    (iii) any payment in commutation of pension received from a fund under clause (23-AAB);”

     

         


    Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers.

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