Before proceeding on TDS provisions applicability on Income from Pension, it is important to understand the different types of pensions and TDS provision. There are 3 primary schemes for pensioners.
1. Regular Pension – Describes a payment, which a person receives upon their retirement. (i.e. Pension Annuity – payment at periodical time interval generally on monthly basis)
♦ TDS will be applicable on Annuity Pension, as it falls under Income from Salary u/s 192
♦ The past employer will be responsible for the payment in case in case of non- government pensioners
♦ For Central & State Govt. pensioners, nationalized banks are responsible for the payment
2. Commutation of Pension – payment of lump sum amount in lieu of a portion of pension surrendered voluntarily by the pensioner based on a duration of period in relation to the age. Excess amount received if any over and above the limits specified u/s 10(10A) above is taxable under the head Income from Salary. Accordingly the TDS provisions will apply
3. Family Pension – Under Section 57 (iia) of the Income Tax Act, it is stated that Family Pension is a regular monthly amount, payable by the employer to a person belonging to the family of an employee in the event of his death.
♦ Family pension will not be covered under this section as family pension is taxed under “Income from other sources”