Govt clarify standard deduction to pension received from former employer

Income Tax Income Tax Press Release
(Last Updated On: April 6, 2018)
Ministry of Finance

Clarification regarding applicability of standard deduction to pension received from the former employer

Posted On: 05 APR 2018 1:55PM by PIB Delhi

The Central Board of Direct Taxes (CBDT) has clarified that the pension received by a taxpayer from his former employer is taxable under the head “Salaries”. The Finance Act, 2018 has amended Section 16 of the Income–tax Act, 1961(“the Act”) to provide that a taxpayer having income chargeable under the head “Salaries” shall be allowed a deduction of Rs 40,000/- or the amount of salary, whichever is less, for computing his taxable income. Accordingly, any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000/- or the amount of pension, whichever is less, under Section 16 of the Act.

Earlier, the representations were received seeking clarification as to whether a taxpayer, who receives pension from his former employer, shall also be eligible to claim this deduction.

CA Satbir Singh
Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters
https://www.taxheal.com/

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