• Breaking News

    Thursday, 5 April 2018

    APPLICABILITY OF STANDARD DEDUCTION TO PENSIONERS- CLARIFICATION

    Applicability of Standard Deduction to Pensioners- Clarification 

    Ministry of Finance 

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

    Posted On: 05 APR 2018 1:55PM by PIB Delhi 

    The Central Board of Direct Taxes (CBDT) has clarified that the pension received by a taxpayer from his former employer is taxable under the head “Salaries”. The Finance Act, 2018 has amended Section 16 of the Income–tax 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. 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. 

    Earlier, the representations were received seeking clarification as to whether a taxpayer, who receives pension from his former employer, shall also be eligible to claim this deduction. 

    Source:- PIB

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