Does the bank deduct TDS on Pension Payments

By | February 23, 2023
(Last Updated On: February 23, 2023)

Does the bank deduct TDS on pension payments

Most of the pensioner ask this question does the bank deduct TDS on Pension Payments ?

Answer is Yes, banks in India are required to deduct TDS (Tax Deducted at Source) on pension payments made to individuals, including pensioners. The TDS rates applicable to pension payments depend on the total income of the pensioner and the tax slab they fall under.

Why TDS is Deducted from Pension Payment

As per section 17(1)(ii) of the Income-tax Act, 1961, the term ‘salary’ includes pension. Threfore Pension is treated in same way as salary under Income tax Act.

CBDT Clarification for TDS on pension payments

CBDT Clarified by vide circular NO. 761 dt. 13/01/98 that in the case of pensioners receiving pension through banks, provisions of TDS are applicable in the same manner as they apply to the salary income.

Under Which Section TDS is Deducted from Pension Payments

TDS is deducted from pension under Section  192 of the Income Tax Act .

At what time TDS is deducted from Pension payment

TDS is deducted from pension at the time of payment,

At what Rate TDS is deducted from Pension Payments

As per the Income Tax Act, 1961, banks are required to deduct TDS on pension payments if the total amount of pension paid to a pensioner during a financial year exceeds the minimum threshold limit . The TDS rate on pension payments can range from5  % to 30% depending on the total income of the pensioner.

Issue of TDS certificate for TDS on pension payments

Once tax has been deducted under section 192 of the Income-tax Act, 1961, the tax-deductor is bound by section 203 to issue the certificate of tax deducted in Form 16.  The certificate in Form No. 16 cannot be

denied on the ground that the tax deductor is unaware of the payees’ other income.

Whether TDS is Deducted on the Family pension ( received after death of person by his family members) ?

TDS is not deducted on family pension as it does not come under the ambit of Section 192 of the Income Tax Act, 1961

What should the Pensioner do so that no TDS is deducted from Pension

Pensioners can also submit Form 15H or 15G to the bank if they are eligible for a lower or nil TDS deduction, based on their total income and tax liability.

Whether pensioner can give Investment proof (PPF LIC etc ) to the Bank so that TDS is deducted at the lower rate ?

yes , From the income being paid as pension the banks are required to allow deductions under chapter VIA.

What should be done if Arrear of pensioner are given ?

Pensioner can calim Relief u/s 89(1) for the arrears of pension received.  Pensioner can file form with bank for relief u/s 89(1) . Instructions in this regard have been issued by Reserve Bank of India vide R.B.I’S pension circular (Central Series) No.7/CDR/1992 (Ref No. PGBA. GA:(NBS) No. 60 / GAG4(11CVL)-91/92) DT. 27/4/92.

How is Pension Income Taxed in Income tax

Pension received from a former employer is taxable as salary and relevant provisions of TDS must be followed

What should be done is TDS is deducted on Pension Payment ?

person can file his Income tax return and calim refund of Income tax or adjust from hus Tax liability .

Whether Pensioners required to file Income Tax Return?

Yes, pension earners are required to file Income Tax Return if their total income (before claiming deductions under section 80C to 80U) exceeds

  • Rs.2.5 lakhs (age of pensioner being less than 60 Years)
  • Rs. 3 lakhs (age of pensioner being 60-80 Years)
  • Rs. 5 lakhs (age of pensioner being above 80 Years)

Total income is not just your pension income. In case you have earnings from any house property like rental income or other sources like interest etc, your aggregate income from all sources should be considered in checking above limits.

Pensioner can file ITR on Income tax Portal

(CA Satbir Singh : Taxheal@gmail.com)
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