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Saturday, May 17, 2014

Income Under the Head Salaries: Treatment of Pension

Uncommuted pension i.e. the periodical pension: It is fully taxable in the hands of all employees, whether government or non-government.
Commuted Pension: Exemption of commuted pension u/s 10(10A)
Govt. employees, employees of local authorities and employees of statutory corporations
Any other employee
Fully exempt
(a) If gratuity is not received: Commuted value of 1/2 of pension which he is normally entitled to receive is exempt.
(b) If gratuity is also received: Commuted value of 1/3rd of pension which he is normally entitled to receive is exempt.