Pension Income Tax Exemption Calculator

Pension income is the amount received after retirement as a reward for past service. Regular pension is generally known as uncommuted pension, while a lump-sum payment received in lieu of a portion of pension is known as commuted pension.

Pension contributions are mandatory for eligible employees under statutory schemes like India's Employees' Pension Scheme (EPS).

No. India's Employees' Pension Scheme (EPS) and Employee's Provident Fund (EPF) are not mandatory unless the total employee head count reaches 20 in a company.

Uncommuted pension is generally fully taxable. The tax treatment of commuted pension depends on the employee category and the applicable exemption rules.

Uncommuted pension is paid periodically, such as monthly pension. Commuted pension is a lump-sum amount received by surrendering a portion of the periodic pension.

For Central Government, State Government, local authority and statutory corporation employees, commuted pension is fully exempt. For other employees, the exempt portion is generally one-third where gratuity is received and one-half where gratuity is not received.

Family pension is taxable under the head Income from Other Sources. A deduction is allowed from family pension equal to the lower of one-third of the pension or the applicable statutory limit.

For pension taxable under the head Salaries, the standard deduction is available up to the applicable statutory limit. The calculator applies the selected old or new tax regime limit.

The calculator annualizes monthly pension where applicable, applies the relevant exemption or deduction based on pension type, and shows the resulting taxable pension income.

For regular pension, the selected tax regime affects the applicable standard deduction. For family pension, the statutory deduction limit is higher under the new tax regime.