Income Tax Return (ITR) Filing for Pensioners

The Income tax returns (ITR) filing for pensioners is necessary as they are recipients of regular pension income. It is significant to know the compliances of this topic as to complete the tax regulatory compliances, and also ensure the availability of exemptions and tax deductions. In this blog, Bizfoc helps you to understand ITR filing for pensioners, from concepts to how to file pension income in ITR filing. Connect with our experienced CAs and tax consultants to file your ITR for pensioners and help you clear your tax liabilities.

Are Pensions Taxable?

In India, the pension income is taxable under the forms head of “Income from Salaries" or "Income from Other Sources," based on the pension type. The pensions that come from the Indian government are Armed forces, Central Civil Services, and State Governments, are generally subject to taxes. However, there are certain provisions under the Income Tax Act, 1961, which provide the pension’s portion can be eligible for deductions or exclusions.

What are Commuted & Uncommuted Pensions?

Commuted Pensions:

The commuted pension means the pension, which has been paid as a lump sum manner, and not on the regular basis. A lump sum payment is done in return for a smaller monthly pension, if a retiree decides to transmit a portion of their benefits. During the calculation of lump sum amount, the pensioner’s age, and life expectancy has been considered as per the pension plan terms. The advantage of a commute pension is the pensioner have instant access to that amount, which can be used for debt repayment, investments, or paying off large bills.

Uncommuted Pensions:

Uncommuted Pensions: An uncommuted pension means the pensioner attains regular, recurring payments in lieu of a lamp sum withdrawal. During their retirement, pensioners who does not take their commute benefits get regular payments at predetermined periods, such as monthly or quarterly.
Pensions that are not commuted offer retirees a reliable and consistent source of income throughout their retirement years, which enables them to cover their ongoing costs and keep their finances stable.

What are the Documents Required for ITR Pensioners

Following are the documents required for ITR filing for Pensioners:

• Form 16/Pension Statement
• Bank Statements for interest income verification.
• Other Income Documents
• Investment Proofs
• Form 26AS for verification of tax credits.
• Property Documents (If applicable for rental income)
• Identity and Address Proof (PAN card, Aadhaar, etc)
• Previous Year's ITR

How to report Pension Income in Income Tax Return?

Here are steps need to follow to report pension income in ITR:

1. Obtain Form 16/Pension Statement: In case, you are the salaried employee and receiving a pension, then you should get a Form 16 from your company, that involves certain details such as pensioner’s salary, taxes deducted, and other pertinent information. Pensioners should receive a pension statement with all the relevant information if they receive a pension from the government or other sources.
2. Identify the Type of Pension: There are two types of pension income, which are:
3. Uncommuted Pension: A pension is deemed uncommuted if you receive the entire amount without taking a lump sum withdrawal.
4. Commuted Pension: Your pension is deemed commuted if you have received a lump sum payment and the remaining amount is received as regular payments.
5. Report Pension Income in the Correct Section: It is based on the source of pension one gets, and it is necessary to file ITR for pension income should be mentioned in correct section. In case, the pension received from the government, then it comes under the “Income from salaries” head, whereas the pension received from other sources, then “Income from other sources”.
6. Enter Employer Details: It is significant to mention the details of employers or pension providers, under the ITR form. It offers the pension giver’s name, residential address, and tax identification number (TAN).
7. Declare Commuted Pension Details (if applicable): In case, the pensioner receives a commuted pension, one may be needed to record the commuted amount in an individual area of their ITR form.
8. Claim Deductions (if Applicable): The pensioner may be capable of claiming some deduction such as the standard deduction or deductions under Section 80 TTB (for elderly people), depends on the pensioner pension’s type, and other situations. Make sure that the pensioner looks over the relevant deduction possibilities which are applicable.
9. Verify and Store: After mentioning all required details in the given form, verify it and submit the ITR filing for pensioners.

Why Choose Bizfoc for ITR Filing for Pensioners?

Bizfoc has a great team of professionals and experts, who ensure to provide reliable reporting and tax savings. They not only provide guidance, but also help you to file ITR for pensioners, and all other compliances related to income tax with reasonable cost and appropriate time.

FAQs for ITR Filing for Pensioners