TDS on Income from Pension

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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”

        ⇒TDS/TCS Rate Chart FY: 2021-22 (AY: 2022-23)⇐

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