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

Clarification regarding applicability of standard deduction to pension received from former employer by CBDT.

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

New Delhi, 5th April, 2018

 

PRESS RELEASE

Clarification regarding applicability of standard deduction to pension received from former employer Finance Act, 2018 has amended Section 16 of the Incometax 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. Representations have been received seeking clarification as to whether a taxpayer, who receives pension from his former employer, shall also be eligible to claim this deduction. The pension received by a taxpayer from his former employer is taxable under the head Salaries. 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.

(Surabhi Ahluwalia)

Commissioner of Income Tax