Pension is a periodical payment received by an employee after his retirement and is taxable as Salary as per Section 17(1)(ii) of Income Tax Act, 1961. Pension including arrears of pension is chargeable to tax on ‘accrual basis’. However, in respect of arrears the assesses can claim relief under section 89(1).
| For a person other than a resident women or a person having age of 65 years or more during the relevant financial year: |
| Sr. No. |
Taxable Income Range |
Income- tax |
| 1. |
where the total income does not exceed Rs, 1,00,000 |
Nil |
| 2. |
where the total income exceeds Rs. 1,00,000 but does not exceed Rs. 1,50,000 |
10 per cent of the amount by which the total income exceeds Rs. l,00,000 |
| 3. |
where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 |
Rs. 5,000 plus 20 per cent of the amount by which the total income exceeds Rs. 1,50,000 |
| 4. |
where the total income exceeds Rs. 2,50,000 |
Rs. 25,000 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000 |
| For a woman resident in India, and below the age of sixty-five years at any time during the relevant financial year: |
| Sr. No. |
Taxable Income Range |
Income- tax |
| 1. |
where the total income does not exceed Rs, 1,35,000 |
Nil |
| 2. |
where the total income exceeds Rs. 1,35,000 but does not exceed Rs. 1,50,000 |
10 per cent of the amount by which the total income exceeds Rs. l,35,000 |
| 3. |
where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 |
Rs.1, 500 plus 20 per cent of the amount by which the total income exceeds Rs. 1,50,000 |
| 4. |
where the total income exceeds Rs. 2,50,000 |
Rs. 21,500 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000 |
| For a resident in India, who is of the age of sixty-five years or more at any time during the relevant financial year: |
| Sr. No. |
Taxable Income Range |
Income- tax |
| 1. |
where the total income does not exceed Rs, 1,85,000 |
Nil |
| 2. |
where the total income exceeds Rs. 1,85,000 but does not exceed Rs. 2,50,000 |
20 per cent of the amount by which the total income exceeds Rs. 1,85,000 |
| 3. |
where the total income exceeds Rs. 2,50,000 |
Rs. 13,000 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000 |
Surcharge on Income-tax
In case of individuals, having Taxable Income above Rs.10,00,000/- Surcharge @ 10% is applicable on the Income-tax payable as above.
However, marginal relief is available to ensure that the additional amount of income tax payable, including surcharge, on the excess of income over Rs.10,00,000/- is limited to the amount by which the income is more than Rs.10,00,000/-.
Education Cess on Income-tax (including surcharge, if any)
In all the cases, the education cess shall be payable @2% of the Income-tax (including surcharge, if any) as computed above.
Deduction under section 80C from Gross Total Income is available upto Rs.100,000/- for investment in specified securities like LIC, PPF etc.
Reimbursement of medical expenditure by the employer
Expenditure on medical treatment in hospitals is not subject to income tax provided it satisfies the requirement of clause (i) and (ii) of the proviso to Section 17(2) of the Act. Whereas any sum paid by the employer in respect of any expenditure actually incurred by the employee on medical treatment other than the treatment referred in clause (i) and (ii) of proviso to Section 17(2) will not be a taxable perquisite provided such sum does not exceed Rs.15,000/-.
Other Benefits that can be claimed by the Senior Citizens while filing the return of income:
- Deduction in respect of expenditure on Medical treatment :
- Section 80DDB provides for a deduction of Rs.40,000 in a financial year (as reduced by any amount received under any medical insurance scheme or reimbursed from the employer) in respect of any expenditure actually incurred by an assessee who is resident in India on medical treatment for specified diseases or ailments for himself or a dependant.
- Further, if the person, in respect of whom the aforesaid medical treatment expenditure has been incurred, is a Senior Citizen (i.e. 65 years or more), a deduction of Rs.60,000 shall be allowed instead of Rs.40,000.
- The above deductions shall be allowed only if the concerned person furnishes a certificate in the prescribed form (Form 10 I) from a neurologist, oncologist, urologist, haematologist or an immunologist or such other specialist as may be prescribed, working in a Government Hospital. The concerned person must file the certificate so received along with his return of Income.
- Deduction in respect of Medical insurance premia :
- Section 80D provides that in respect of an amount paid towards medical insurance premia of Senior Citizens, deduction shall be allowed to the extent of Rs.15,000 instead of Rs.10,000 in other cases. Insurance policy may be taken for insuring the health of the pensioners or his wife or her husband or dependent parents or dependent children of the pensioner.
- Deduction in respect of family pension (chargeable under the head "Other Income)":
- Section 57(iia) provides that in the case of income in the nature of family pension, a deduction of a sum equal to fifteen thousand rupees or one third of such income, whichever is less, is available. For the purpose of this clause the term “family pension” means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death. Please note that in such cases the amount received by the spouse/dependents of the employee from the employer would be taxed in the hands of the spouse/dependent under the head “Income from other sources” and not under “Salary”.