In this video conversation, we are discussing that Commutation of Pension is beneficial or not, Income Tax on Commutation of Pension, Commutation of Pension Rules, what is commutation of pension, calculate commutation of pension, commutation of pension calculation, commutation on retirement, commutation of retirement benefits, etc.,
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Income Tax on Commutation of Pension
The process of commutation of pension provides individuals with an option to receive a lump sum amount in lieu of their regular monthly pension payments. This option can be availed by government employees, as well as individuals who have subscribed to pension plans offered by private institutions. However, it is important to note that the commuted amount is subject to income tax.
Under the Income Tax Act, 1961, the commuted portion of a pension is treated as income and taxed accordingly. The taxability of the commuted pension depends on the nature of the recipient, i.e., whether the recipient is a government employee or a non-government employee.
For government employees, the commuted portion of pension is fully exempt from income tax. This means that they do not have to pay any tax on the lump sum amount received upon commutation. However, this exemption is only applicable in cases where the entire pension is commuted. If only a part of the pension is commuted, the commuted portion will be tax-free up to a certain limit, which is determined based on the employee’s age. Any commutation amount exceeding this limit will be taxable.
Non-government employees, on the other hand, are liable to pay tax on the commuted portion of their pension. The taxability is determined based on the method of calculation used for commutation. If the commuted amount is calculated using a predetermined formula specified by the Income Tax Act, then the commuted portion will be fully exempt from tax. However, if the commuted amount is determined based on the employee’s discretion, then it will be partially exempt, subject to certain conditions.
In cases where the commutation amount is partially taxable, the tax liability will depend on the overall income of the individual. The commuted portion will be added to the individual’s annual income, and the applicable tax rate will be determined based on the income tax slabs applicable for that particular financial year.
It is important for individuals availing the option of commutation of pension to be aware of the income tax implications. They should calculate the tax liability beforehand and set aside the required amount to avoid any financial surprises. Seeking professional advice from a tax consultant or chartered accountant can also be beneficial in understanding the tax obligations and planning accordingly.
In conclusion, while the option of commutation of pension provides individuals with financial flexibility, it is essential to consider the income tax implications. Government employees can enjoy full tax exemption on the commuted portion of their pension, whereas non-government employees may be subject to partial taxation, depending on the computation method and their overall income. Being informed about these tax rules ensures compliance with the law and helps individuals make informed decisions about their pension income.
इससे पिछली वीडियो और इस वीडियो को देखने के बाद कम्युटेशन कराना चाहिए या नहीं करना चाहिए उससे संबंधित सभी बातें और फंडे क्लियर हो गए। आपने बहुत अच्छे प्रकार से उदाहरणों के साथ इनकम टैक्स की गणना करते हुए समझाया।
आप जटिल विषयों को भी बहुत अच्छे से सरल तरीके से उदाहरणों के साथ समझाते हैं। इतनी ज्ञानवर्धक वीडियो के लिए आपका धन्यवाद। आपकी नई वीडियो का बेसब्री से इंतजार रहता है। इसके बाद अगली वीडियो कब तक आएगी ? ईश्वर आपको दीर्घायु प्रदान करें।
Sir , commutation retirement ke kuch time (6 month,1 year)baad bhi le sakte hein kya..
Means agar kisi ne retirement ke time na liya ho..
Jindagi bhar paise ko banko me jama karte jauenge to upbhog kab karega?
Autonmus body k tax free hota h ya nhi
सर अ शासकीय सहायताप्राप्त विधालय के शिक्षक को पेंशन बेच कर मिलने वाली आय पर टैक्स देना है या नहीं
Agar koi viakti Commutation amount ko FD etc me nhi lgata to kea income tax orkam ho jaega?
excellent sir…❤❤❤❤
Appointment month of December and Oct increment konse month meh Lagu hoga?
Well explained, thanks
Sir
This is very useful information. Please clarify this Punjab State Power Corporation Ltd which is owned company of Punjab Government. Employees of this Government corporation can be treated as State Government employees or not for exemption of income tax on computation of pension.
Thanks
Hi Sir,
Wanted to know what is the gross salary for pensioner who has commuted some amount of pension that was recieved in previous financial year.
like today pension recieved is basic(eg 40000) + DA(eg 20000) – commuted amount(eg 15000) so how to calculate gross salary for itr basic + DA = (60000) or basic + DA – commuted amount = (45000).
Please Help here its hard to understand.
Thanks
Max 20 L limit hya
Sir जिस तरह से आप उदाहरण देकर समझाते हैं मुझे लगता कि हर व्यक्ति बहुत अच्छी तरह से समझ जाएगा ।
आप कोई बात अधूरी छोड़ते ही नहीं हो । ऐसी विडियो बनाने के लिए आप का बहुत बहुत धन्यवाद
प्रणाम
Sir aap bhut acchi trh se smjate h Tq sir
Sir good morning. Sir monthly recovery of commutation is taxable or not?
My gross income is 95 lakhs. But net income is 20 lakhs. Tell me which ITR I should file…??
15salKeBadBhiCoumtaionKatRaheHaiBankManmaniKarRaheHai
आपका समझाने का तरीका बहुत सरल और साफ है. धन्यवाद