I am a widow and get pension. Is my pension taxable?
We have assumed that you receive regular monthly family pension from the employer of your spouse on account of his death. The said pension income shall be taxable in your hands as “income from other sources”. You could claim a deduction of one-third per cent of such pension income or Rs.15,000, whichever is lower.
Any family pension received by any member of the family of an individual who has been in service of the Central or state government and has been awarded specified gallantry awards is exempt from tax. Similarly, any 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, subject to some prescribed conditions, is exempt from tax.
If the family pension received by you does not fall in the above excluded category, then the net pension income shall be taxable in your hands as per your tax slab rate, depending on your other taxable income.
I have completed five years in my current organization and am changing my job. I am eligible for gratuity. How will it be calculated? Will it be taxable?
Assuming that your current organization is covered under the Payment of Gratuity Act, 1972 (POGA), you shall be entitled to gratuity computed as per the specified provisions of POGA. The quantum of gratuity would depend upon your last drawn salary and years of service in the organization. Any gratuity received while in service should be taxable as salary income.
The exemption amount with respect to gratuity received would be computed as per section 10(10)(ii) of the Income-tax Act, 1961 and shall be restricted to the least of the following:
•15 days’ salary based on last drawn salary for each completed year of service or part thereof in excess of 6 months;
•Statutorily prescribed cap of Rs.10 lakh; or
•Actual gratuity received.
The term salary includes basic salary and dearness allowance, if the terms of employment so provide, but excludes other allowances, bonus, overtime salary and perquisites. Any gratuity amount received in excess of the above prescribed limit shall be taxable in your hands. Further, you shall be entitled to claim relief as per section 89 of the Act.
In case you have received any gratuity in any of the earlier financial years (FYs) from your former employer(s), the statutory cap of Rs.10 lakh would be reduced by the amount of gratuity claimed as exempt from tax in any of such previous FYs.
In case your employer is not covered under POGA, the quantum of gratuity and exemption shall be computed according to section 10(10)(iii) of the Act and the method of computation of exemption would differ.
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