Arrear Received by pensioner

[Asish Kumar Nath]

Dear Expert,

My father retired from BSNL on 01.04.2007.  on September-2012 he received pension arrears,  gratuity arrears and pension commutation arrears which is cumulatively Rs.4 lacs. and his pension is also increased. From September bank has deducted TDS from his monthly pension.  Is this type of arrear is taxable?

He has a MIS in post office and a few Fixed deposit with bank. If the arrears is not table then is total salary will be  ( Total pension for the year + Interest from MIS for the year + Interest from F.D for the year). He has purchase a NSC worth Rs.1 lack in this financial year and as per new income tax rules interest from S.B a/c will not be taxable.

Please figure out how his taxable income can be relise?

[Padma Balakrishnan]

The pension arrears is taxable.The gratuity arrears & commutation arrears are taxable if they exceed the amount as per rules.As your father was in BSNL I think the gratuity & commutation arrears would be within limits (i presume he has got VI Pay Commission arrears).Hence include the pension arrears with actual pension & other income as specified by you & compute the tax.

CA Padma Balakrishnan

AI Summary

Pension arrears taxable and must be included with other income for annual tax computation and TDS treatment. Pension arrears are taxable and must be included in the recipient's total income for the year received. Gratuity and commutation arrears are taxable only to the extent they exceed statutory or scheme exemptions; where pay commission arrears apply, such amounts often fall within exemption limits but should be tested. Aggregate the pension arrears with pension and other income and compute tax liability accordingly.