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Is pension exempt / rebated under IT Act ?
Human Resources » Compensation & Benefits

Chrm Message From: pthakur Total Posts: 20 Join Date: 07/01/2008
Rank: Executive Post Date: 01/04/2008 10:12:43 Points: 100 Location: United States

Dear All,

I need information on whether the monthly pension payable to a retiree (whether on VRS or superannuation) is exempt or rebated from IT, and if so to what extent, and under what section of the law.

Please note that I am talking about un-commuted pension which is drawn every month by the pensioner, not about commuted pension drawn as lumpsum.

Also, does it make any difference in terms of taxability if the person concerned was in the employ of a central / state government institution (like RBI or LIC) and the pension is being drawn from this employer?

Thanks in advance for your valuable inputs.

With Best Regards,

P Thakur

Chrm Message From: jac Total Posts: 34 Join Date: 07/01/2008  
Rank: Executive Post Date: 01/04/2008 10:13:35 Points: 170 Location: United States

In my opinion, any monthly pention receivable after retirement is treated as salary income and as such it is taxable under Income Tax Act .

However, in the case of VRS compensation received, an exemption for the amount not exceeding Rs.5 lakhs is provided under Income Tax Act.