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Are retirement benefits taxable? How retired employees can file ITR in FY24?


Retirement benefits are cash advantages received by retired people in their golden years. Individuals should be aware of the taxability of any retirement benefits they receive, including gratuity, commuted pensions, leave encashments, GPF, retirement plans, social security benefits, etc. These benefits are taxed under ‘Salaries’ as ‘profits in lieu of Salaries’ as specified in section 17. (3). Retired individuals need to be aware of how retirement benefits are taxed during FY24, and they may learn this from various industry experts here.

Retirement benefits are cash advantages received by retired people in their golden years. Individuals should be aware of the taxability of any retirement benefits they receive, including gratuity, commuted pensions, leave encashments, GPF, retirement plans, social security benefits, etc. These benefits are taxed under ‘Salaries’ as ‘profits in lieu of Salaries’ as specified in section 17. (3). Retired individuals need to be aware of how retirement benefits are taxed during FY24, and they may learn this from various industry experts here.

S. Ravi, Former Chairman of BSE (Bombay Stock Exchange)

Retirement benefits are an important consideration for those who have worked hard throughout their careers and are looking forward to their retirement years. However, many people may not be aware that these benefits are subject to taxation. In India, retirement benefits such as pensions, gratuities, and other forms of superannuation are taxable under certain conditions.

S. Ravi, Former Chairman of BSE (Bombay Stock Exchange)

Retirement benefits are an important consideration for those who have worked hard throughout their careers and are looking forward to their retirement years. However, many people may not be aware that these benefits are subject to taxation. In India, retirement benefits such as pensions, gratuities, and other forms of superannuation are taxable under certain conditions.

The taxability of retirement benefits depends on a number of factors, including the type of benefit, the amount received, and the individual’s tax status. For example, if an individual receives a pension from a former employer, that pension is taxable as income in the year it is received. Similarly, if an individual receives a gratuity payment upon retirement, that payment may also be subject to taxation.

The taxability of retirement benefits depends on a number of factors, including the type of benefit, the amount received, and the individual’s tax status. For example, if an individual receives a pension from a former employer, that pension is taxable as income in the year it is received. Similarly, if an individual receives a gratuity payment upon retirement, that payment may also be subject to taxation.

To file income tax returns (ITR) for retirement benefits, individuals should gather all relevant documentation, such as pension statements and Form 16. They should then determine the amount of tax owed on their retirement benefits and file their ITR accordingly.

To file income tax returns (ITR) for retirement benefits, individuals should gather all relevant documentation, such as pension statements and Form 16. They should then determine the amount of tax owed on their retirement benefits and file their ITR accordingly.

It is important to note that while retirement benefits may be subject to taxation, there are also several deductions and exemptions available to retirees that can help to reduce their tax burden. For example, under Section 80C of the Income Tax Act, individuals can claim a deduction of up to Rs. 1.5 lakh on their taxable income.

It is important to note that while retirement benefits may be subject to taxation, there are also several deductions and exemptions available to retirees that can help to reduce their tax burden. For example, under Section 80C of the Income Tax Act, individuals can claim a deduction of up to Rs. 1.5 lakh on their taxable income.

In conclusion, retirement benefits are indeed taxable in India, and individuals should be aware of the tax implications when planning for their retirement. However, with careful planning and the help of a qualified tax professional, retirees can navigate the tax system and make the most of their retirement savings.

In conclusion, retirement benefits are indeed taxable in India, and individuals should be aware of the tax implications when planning for their retirement. However, with careful planning and the help of a qualified tax professional, retirees can navigate the tax system and make the most of their retirement savings.

Sujit Bangar, Founder, Taxbuddy.com

Retirement benefits are a crucial source of income for retirees, but the taxability of these benefits varies based on the type received. Uncommuted pension, which is paid in installments, is fully taxable as “Income from Salary” for both government and non-government employees.

Sujit Bangar, Founder, Taxbuddy.com

Retirement benefits are a crucial source of income for retirees, but the taxability of these benefits varies based on the type received. Uncommuted pension, which is paid in installments, is fully taxable as “Income from Salary” for both government and non-government employees.

Commuted pension, which is a lump sum payment at retirement, is fully exempt for government employees but may be partially exempt for non-government employees, depending on their retirement plan and the amount of gratuity received. Individuals must report their retirement benefits as part of their total income when filing their Income Tax Return (ITR) and pay tax accordingly.

Commuted pension, which is a lump sum payment at retirement, is fully exempt for government employees but may be partially exempt for non-government employees, depending on their retirement plan and the amount of gratuity received. Individuals must report their retirement benefits as part of their total income when filing their Income Tax Return (ITR) and pay tax accordingly.

For example, Under the Payment of Gratuity Act, gratuity is exempt from tax up to a limit of Rs. 20 lakhs, while for those not covered by the act, the tax exemption limit is Rs. 10 lakhs. If the gratuity amount surpasses these specified limits, tax will be levied only on the excess amount.

For example, Under the Payment of Gratuity Act, gratuity is exempt from tax up to a limit of Rs. 20 lakhs, while for those not covered by the act, the tax exemption limit is Rs. 10 lakhs. If the gratuity amount surpasses these specified limits, tax will be levied only on the excess amount.

Abhishek Soni, Co-founder & CEO of Tax2win

Retirement benefits are a great way to secure one’s financial future, but it is important to remember that they are subject to taxation, either fully or partially. Most of the retirement benefits are tax-free for government employees. Common retirement benefits such as a pension, gratuity, Voluntary Retirement Schemes (VRS), leave encashment, and National Pension Scheme (NPS) are taxed based on income tax slab rates and other applicable provisions of the law. You can file the income tax return through the government e-filing portal or online tax filing portals where you need to disclose these benefits in your total income. Even if your income is tax-free, it is suggested to disclose the same in the ITR.

Abhishek Soni, Co-founder & CEO of Tax2win

Retirement benefits are a great way to secure one’s financial future, but it is important to remember that they are subject to taxation, either fully or partially. Most of the retirement benefits are tax-free for government employees. Common retirement benefits such as a pension, gratuity, Voluntary Retirement Schemes (VRS), leave encashment, and National Pension Scheme (NPS) are taxed based on income tax slab rates and other applicable provisions of the law. You can file the income tax return through the government e-filing portal or online tax filing portals where you need to disclose these benefits in your total income. Even if your income is tax-free, it is suggested to disclose the same in the ITR.

Dr. Suresh Surana, Founder, RSM India

Yes, retirement benefits are taxable in most of the cases. Some of the common retirement benefits include gratuity, pension and provident fund, the tax implications for which are discussed as below:

Dr. Suresh Surana, Founder, RSM India

Yes, retirement benefits are taxable in most of the cases. Some of the common retirement benefits include gratuity, pension and provident fund, the tax implications for which are discussed as below:

Tax Implications of Gratuity

Tax Implications of Gratuity

Gratuity is a monetary benefit received by an employee either at the time of retirement, on death, on resignation or during the course of employment. Any gratuity received by an employee during the course of his/her employment shall be fully taxable under the provisions of IT Act.

Gratuity is a monetary benefit received by an employee either at the time of retirement, on death, on resignation or during the course of employment. Any gratuity received by an employee during the course of his/her employment shall be fully taxable under the provisions of IT Act.

Further, any death cum retirement gratuity received by government employees shall be fully exempt from tax u/s 10(10)(i) of IT Act whereas other than government employees may claim exemption upto certain amount as follows:

Further, any death cum retirement gratuity received by government employees shall be fully exempt from tax u/s 10(10)(i) of IT Act whereas other than government employees may claim exemption upto certain amount as follows:

For employees covered by The Payment of Gratuity Act, 1972

For employees covered by The Payment of Gratuity Act, 1972

In accordance with Section 10(10)(ii) of IT Act, the exemption amount would be least of the following:

In accordance with Section 10(10)(ii) of IT Act, the exemption amount would be least of the following:

a. Actual amount of Gratuity received

a. Actual amount of Gratuity received

b.15 days salary for each completed year of service or part of the year in excess of 6 months (i.e. 15/26 * Last drawn salary * completed years of service)

b.15 days salary for each completed year of service or part of the year in excess of 6 months (i.e. 15/26 * Last drawn salary * completed years of service)

For employees not covered by The Payment of Gratuity Act, 1972

For employees not covered by The Payment of Gratuity Act, 1972

In accordance with Section 10(10)(iii) of IT Act, the exemption amount would be least of the following:

In accordance with Section 10(10)(iii) of IT Act, the exemption amount would be least of the following:

a.Actual amount of Gratuity received

a.Actual amount of Gratuity received

b.½ month’s salary for each year of completed service, calculated on the basis of the average salary for the last 10 months (i.e. 15/30 *Average salary of 10 months* completed years of service)

b.½ month’s salary for each year of completed service, calculated on the basis of the average salary for the last 10 months (i.e. 15/30 *Average salary of 10 months* completed years of service)

For the purpose of aforementioned computation, salary for the purpose of this clause includes Basic Salary, Dearness Allowance (if provided in the terms of employment) and commission as a percentage of turnover achieved by the employee.

For the purpose of aforementioned computation, salary for the purpose of this clause includes Basic Salary, Dearness Allowance (if provided in the terms of employment) and commission as a percentage of turnover achieved by the employee.

Tax Implications of Pension u/s 10(10A) of IT Act

Tax Implications of Pension u/s 10(10A) of IT Act

Pension is paid out by the employers to retired individuals, periodically, generally monthly. However, an individual may choose to receive pension lump sum instead of periodical payment. Thus, pensions can be received in two ways, first is on a monthly basis (uncommuted pension) and second is by way of a lump-sum (commuted pension). Uncommuted pension is always taxable as salary in the hands of both government as well as non-government employees.

Pension is paid out by the employers to retired individuals, periodically, generally monthly. However, an individual may choose to receive pension lump sum instead of periodical payment. Thus, pensions can be received in two ways, first is on a monthly basis (uncommuted pension) and second is by way of a lump-sum (commuted pension). Uncommuted pension is always taxable as salary in the hands of both government as well as non-government employees.

The taxability of commuted pension is as follows:

The taxability of commuted pension is as follows:

· Any commuted pension received by any government employee is wholly exempt from tax.

· Any commuted pension received by any government employee is wholly exempt from tax.

·In case of other than government employees,

·In case of other than government employees,

· One third of the amount of commuted pension which the employee would have received had he commuted the whole of pension shall be eligible for exemption provided such employee is also in receipt of gratuity.

· One third of the amount of commuted pension which the employee would have received had he commuted the whole of pension shall be eligible for exemption provided such employee is also in receipt of gratuity.

· One half of the amount of commuted pension which the employee would have received had he commuted the whole of pension shall be eligible for exemption in case where such employee has not received any income in the nature of gratuity.

· One half of the amount of commuted pension which the employee would have received had he commuted the whole of pension shall be eligible for exemption in case where such employee has not received any income in the nature of gratuity.

Tax Implications of Provident Fund

Tax Implications of Provident Fund

The tax implication of the amount of provident fund received at the time of retirement would depend upon the type of the provident fund i.e. recognized or unrecognised provident fund, statutory provident fund, etc. For instance, in case of Recognised, Statutory Provident Fund, etc., the amount withdrawn at the time of retirement/ termination would be exempt u/s 10(11) and 10(12) of the IT Act. Such exemption would be withdrawn in case of interest income earned on Provident Fund (Recognised and Statutory) on annual contribution in excess of Rs. 2,50,000 and any interest earned on PF Contribution on such excess contribution would be taxable under the head ‘Income from Other Sources’.

The tax implication of the amount of provident fund received at the time of retirement would depend upon the type of the provident fund i.e. recognized or unrecognised provident fund, statutory provident fund, etc. For instance, in case of Recognised, Statutory Provident Fund, etc., the amount withdrawn at the time of retirement/ termination would be exempt u/s 10(11) and 10(12) of the IT Act. Such exemption would be withdrawn in case of interest income earned on Provident Fund (Recognised and Statutory) on annual contribution in excess of Rs. 2,50,000 and any interest earned on PF Contribution on such excess contribution would be taxable under the head ‘Income from Other Sources’.

How to report the retirement benefits in the ITR

· Every taxpayer receiving the retirement benefits should include the monetary quantum of such benefits in the Gross Salary under Schedule S ‘Details of Income from Salary’.

How to report the retirement benefits in the ITR

· Every taxpayer receiving the retirement benefits should include the monetary quantum of such benefits in the Gross Salary under Schedule S ‘Details of Income from Salary’.

· Further, the taxpayer if claiming any exemption under section 10 of the IT Act with respect to such retirement benefits received should disclose the same under Point 3 of Schedule S which provides for “Allowances to the extent exempt u/s 10″. The details of such exemption would be provided by selecting the drop down options as provided in e-filing utility.

· Further, the taxpayer if claiming any exemption under section 10 of the IT Act with respect to such retirement benefits received should disclose the same under Point 3 of Schedule S which provides for “Allowances to the extent exempt u/s 10″. The details of such exemption would be provided by selecting the drop down options as provided in e-filing utility.

Suman Bannerjee, CIO, Hedonova

Yes they are taxable. The Indian Income Tax Act, 1961 makes it mandatory for income earned from employment, whether salary or otherwise, to be taxed. If you’re on the verge of retirement, you need to consider how to manage your retirement benefits. Consulting an investment advisor is certainly a good bet. However, it also helps to do your own homework to avoid being clubbed in the high tax bracket as you near retirement.

Suman Bannerjee, CIO, Hedonova

Yes they are taxable. The Indian Income Tax Act, 1961 makes it mandatory for income earned from employment, whether salary or otherwise, to be taxed. If you’re on the verge of retirement, you need to consider how to manage…



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