Personal Finance

Your Taxes

Sudhakar Sethuraman | Updated on September 29, 2019 Published on September 29, 2019

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My mother was a PSU bank employee, who retired on October 3, 1999, and had been receiving monthly pension since her retirement. She passed away on June 15, 2002.Since her demise, the family pension was received by my father, who passed away on December 1, 2013. I am the sole surviving legal heir. Later, we were informed that the bank had incorrectly calculated the pension, and as per the order of the Supreme Court, the pension was revised from October 4, 1998, till April 30, 2005, and the arrears with interest was paid to me in December 2018 amounting to ₹89,825 ( including ₹54,226 as interest as per orders by the court). The bank deducted TDS of ₹28,026 at 30 per cent, plus cess, and credited my account with ₹61,799. I am salaried employee and come under the 30 per cent I-T bracket. Please let me know the following: Is there any rebate that I could claim for the arrears of the pension received as a legal heir? Is the PSU right in deducting TDS at 30 per cent? Should the income received be treated as other income?

Nithyanand AK

The arrears of pension received as a legal heir would be regarded as ‘family pension’ as per the Income Tax Act, and is taxable under the head ‘Income from Other Sources’.

A deduction under Section 57(iia) of the I-T Act can be claimed for a sum of (i) one-third the amount of the family pension received or (ii) ₹15,000, whichever is less. In this case, it will be one-third of ₹35,599 (₹89,825 - ₹54,226) or ₹15,000, whichever is less. Since taxes are deducted (might be because of the interest element included in the arrears), you could claim credit for such taxes against your total tax liability.

You are eligible to claim rebate under Section 89 in relation to the arrears of the family pension received. Please note that you will have to file Form 10E online on the income tax portal to claim such relief.

The writer is Partner, Deloitte India. Send your queries to [email protected]

Published on September 29, 2019
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