What is the Taxability of Pension in India?

Types of Pensions

Is Monthly Pension Income Taxable?

Are Retirement Benefits Taxable?

How to Calculate Tax on a Commuted Pension?

Are Pensioners Required to File Income Tax Returns?

Frequently Asked Questions

What are the benefits of investing in a retirement fund scheme? up-arrow

The benefits of investing in a retirement fund scheme are as follows:

  • Investors can accumulate funds for retirement periodically over a long period.
  • One can purchase these plans with his/her spouse and hold a joint account.
  • Investors will get flexibility in terms of payout method, be it monthly, quarterly, half-yearly or yearly.

What is an annuity? up-arrow

An annuity is an insurance product that offers investors a fixed income source, and they will receive this regularly post-retirement. Individuals can choose to receive these retirement benefits on a monthly, quarterly, half-yearly or annual basis.

Do I need to file an Income Tax Return on my pension income? up-arrow

People need to file Income Tax Return if their annual pension income is more than ₹2.5 lakh. When it comes to senior citizens above the age of 60, the threshold amount is set at ₹3 lakh. For super senior citizens above the age of 80, the threshold amount is ₹5 lakh.

Does pension fall under standard deduction for salary income? up-arrow

When it comes to taxability, pension income gets treated as salary income. Pensioners can claim the standard deductions for salary income.

Who is responsible for deducting TDS for pension? up-arrow

The responsibility of deducting TDS for pension lies with the employer, irrespective of whether it is the Central Government, State Government or private companies and banks paying annuity pension. When it comes to superannuation plans, the insurance company is responsible for deducting TDS.