Is Family Pension Taxable?

Hi,

We are all aware that an employee's pension is a retirement compensation that they get after retiring. After the employee's passing, this retirement payment is frequently also given to any dependent family members. In these circumstances, it is known as a family pension. The tax regulations that apply to pensions and family pensions are listed below. Pension is the monthly retirement payout provided to employees. It is known as a family pension if this benefit is given to dependent family members following an employee's passing. But what most of us forget to ask about is that“is

family pension taxable”. If you have this question in mind about income tax on family pension, I have the answer for you. Please keep reading to know the answer to this.

Is family pension income taxable in India?

Family Pensions for Nominees with Dependents In their income tax returns, family pension benefits are taxed as "Income from Other Sources." On uncommuted pensions, family pension exemptions are limited to a maximum of $15,000 or a third of the retirement received, whichever is less. The main advantage of obtaining a family pension that is commuted is that lump sum payments are received. While claiming tax advantages, you can utilise them according to your needs. Family members who receive pension payments must include them in their tax filings as "Any additional income generated in the source specified in Income Tax Return 2." (ITR 2).

Pensions can be of two different types:

• Travel Pension: pension payment made in one lump sum

• Pension Uncommuted: Monthly pension payments are made.

Family pension is taxable or not in India?

Typically, during employment time, both employers and taxpayers make contributions to a pension fund. The fund is used to pay the pension following retirement. Spouses, kids under 25, daughters who aren't married or divorced yet till the wedding, and dependent parents in certain situations until death is among the family members who are deemed dependent. Following legal changes, the concept of dependent relatives now includes a few unusual items.

The spouses of dead government workers who are officially divorced but have children may be eligible for family pension benefits. Only in the event that the children's qualification for getting these payments is rejected. Some provisions for receiving family pension benefits are available to disabled children. They are compensated by means of legal guardians. Children born into null marriages or after the passing of their birth parents are likewise provided for.

Differences of Tax Liability Between Uncommuted and Commuted

Periodic family pension payments or uncommuted pensions are completely taxable because they are considered income. In some circumstances, commutated pensions or lump amounts are excluded from family pension requirements. Government, United Nations, and Army Forces workers receive tax-free commuted pensions, while non-government workers are only partially exempt. A third of any gratuity you receive each month in addition to your pension is tax-exempt, with the remaining amount being considered taxable income. If it's just a monthly pension, half of the money is tax-free. It ought to be 100% of the pension getting commuted in both situations.

This is all you need to know about ‘is family pension taxable’

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