1.INCOME FROM OTHER SOURCES- Family Pension.pptx

Income from Pension- Other soruces of Income

1. FAMILY PENSION INCOME TAXABLE OR EXEMPT INCOME HEAD?

2. FAMILY PENSION INCOME If you are receiving any pension income on behalf of a deceased family member Then it’ll become taxable under this head. Though you can claim a deduction of Rs. 15,000 or 1/3rd of the amount received, whichever is lower. EXCEPTIONS IN RESPECT OF FAMILY PENSION : The family pension received by the widow or children or nominated heirs, of a member of the armed forces (including para- military forces) of the union, where the death of such member has occurred in the course of operational duties, in specified circumstances would, however, be exempt under section 10(19) The family pension received by any member of the family of an individual who had been in the service of Central Government and has bad been awarded “Param Vir Chakra” or “Maha Vir Chakra” or “Vir Chakra” or other notified gallantry awards would be exempt under section10(18)(ii) Eg : A family member receives a monthly pension of Rs. 50,000/-. What is Exemption Limit.? = 50000* 1= 16,665 3 Lesser of 2 so 15,000 is Exempted Balance 35,000 is Taxable OR =15,000

3. Family pension received by a family member of the Pensioner is taxed under the category “Income from other sources.” Family pension exemptions on uncommuted pensions are set to a maximum of ₹15,000 or a third of the pension received - whichever is lower. The primary benefit of the commuted pension is that you get lump-sum amounts. You can then use them based on your needs while claiming tax benefits. When filing their tax returns, family members receiving pension payments must report them under the ‘Any other income earned’ in the sources scheduled in Income Tax Return 2 (ITR 2). There are two types of pensions- 1.  Commuted pension:  Payment of the pension as a lump sum amount 2.  Uncommuted pension:  Pension income is paid monthly

4. Alex died on 31st July 2022 while being in Central Government service. In terms of rules governing his service, his widow Mrs. Alex is paid a family pension of ₹ 10,000 p.m. and dearness allowance of 40% thereof. State whether the amount of family pension is assessable in her hands, and if so, under what head of income. Can she claim any relief/deduction on such receipt? Compute taxable income for the assessment year 2023-24 and tax thereon. Computation of gross total income of Mrs. Alex for the A.Y.2023-24 Particulars Details Amount Income from other sources     Family pension [(₹ 10,000 + ₹ 4,000) x 8] [From 01-08-2022 to 31-03-2023]   1,12,000 Less: Standard deduction being minimum of the following:     a) 1/3rd of the pension 37,333   b) Statutory limit 15,000 15,000 15,000 Total Income 97,000   97,000 Tax on above   Nil It is assumed that other income of Mrs. Alex is nil.

5. Mrs. X is getting family pension of Rs,7,000/- pm . Compute the tax liability if Mrs. X Opts for 115 BAC and in case doesn’t opts. Solution : Particulars Old Regime Not Opted 115 BAC New Regime Opting 115BAC Mrs. X Pension pm 7,000.00 7,000.00 Per Annum Pension 84,000.00 84,000.00       Less: Deduction u/s 57(iia)   No Deductions Allowed   a.)1/3 of 84000 = Rs.28000   b.) Rs. 15000     Least of a or b 15,000.00         TAXABLE AMOUNT 69,000.00 84,000.00