Income Tax Return: If you have retired from your job, you still need to file ITR on the pension you receive. The pension is taxed as income from salary by the Income Tax Department. For the purpose of taxation, an individual resident who is 60 years or more, but less than 80 years, at any time during the previous year, is considered as a senior citizen.
A person who is 80 years or above any time during the year is considered as a super senior citizen. Senior citizens who get up to Rs 3 lakh as pension annually are exempted from payment of income tax under the old taxation regime. Those under the new scheme are exempted if their annual income is below Rs 2.5 lakh.
Here is everything you need to know about how to file pension income in your tax returns:
Tax treatment of different types of pension:
Government pension: Pension received from the state or central government is fully taxable under “salary” in income tax returns.
Family pension: The legal heirs of a deceased person, who was receiving a pension, receive this amount. It is taxable under the “Income from other sources” section in ITR. The tax liability is calculated on the basis of the income tax slab rate applicable to the recipient.
Private sector pension: Pension received from private companies must be included in the ITR under “income from salary.” The employer will cut tax deducted at source (TDS) from the pension income. The taxpayer must file their ITR accordingly.
How to file pension income as ITR:
― Use Form 16 or 16A as applicable. To file your returns online, visit the website incometax.gov.in.
― Login to the ITR portal and calculate your income tax liability based on your pension and other sources of income.
― Use Form 26AS to reconcile your tax deducted at source with the net tax payable.
― Fill in the details of the ITR form and file your tax returns by the due date.
Tax benefits:
Pensioners can get tax benefits under u/s Section 80C, 80CCC, 80CCD for payments towards provident fund, life insurance premiums, national savings certificate, pension scheme of central government and annuity plan of Life Insurance Corporation of India or other insurer towards pension scheme under the old taxation regime. The combined deduction limit under sections is Rs 1,50,000. The exemptions cannot be availed if the pensioner is under the new tax regime.
For both the old and new tax regime, tax deduction is applicable under u/s 80CCD(2) for the contribution made by an employer to the pension scheme of the Centre. If the employer is a public sector unit, state government or other unit mentioned under the section, the deduction limit of 10 percent of salary. If the employer is the central government, the deduction limit is 14 percent of salary.
For more details, you can visit the website of the income tax department.
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