Pensioners

The pensioners are liable to pay tax if their total income exceeds the maximum exemption limit.

The maximum exemption limit for an individual is Rs.250000. However, for senior citizen of age 60 years or more but less than 80 years is Rs.300000 and for 80 years or above it is Rs.500000.

Please check the slab rate to know your tax liability. https://cleartax.in/s/income-tax-slabs

If the income is below the maximum limit, they need not file Income tax return.

If the income is below taxable limit and TDS is deducted on the FD interest by Bank, they can claim the credit of TDS by filing income tax return or filing form 15G/H

FD interest: https://cleartax.in/s/income-tax-on-fixed-deposit-interest

Two kinds of pension: -

• Uncommuted pension: -periodical payment on monthly basis
• Commuted pension: -when a person forgoes a portion of the pension and receive a lump sum amount by surrendering such portion of pension, this is called commuted pension. The pension may be fully or partly commuted.

Exemptions:

1. Uncommuted pension: Fully taxable
2. Commuted Pension:

  a)Exempted in case of Government employee or employee of local authorities or statutory corporation

  b) Non-Government Employee. Any commuted pension received is exempt from tax in the following manner:

If the employee is in receipt of gratuity

Exemption = 1/3^rd of the amount of pension which he would have received had he commuted the whole of the pension.

If the employee does not receive a gratuity

Exemption = ½ of the amount of pension which he would have received had he commuted the whole of the pension

Caution: Exemption shall be to the extent it is allowed to be commuted and the balance uncommuted Pension received periodically will be fully taxable.

Pension that is received from UNO by its employees or their family is exempt from tax