1. Good news in making for pensioners! Pension income up to Rs 5 lakh a year may be tax exempt

Good news in making for pensioners! Pension income up to Rs 5 lakh a year may be tax exempt

The Narendra Modi government may take up the proposal made by MP Shashi Tharoor to increase the tax exemption limit for pension up to Rs 5 lakh during the ongoing preparation for the Union Budget 2018.

By: | Published: November 27, 2017 2:06 PM
SC ruling over hike in pension, EPFO subscribers, pensions may rise 10 times, private sector employees, EPS, EPF, EPFO amendment in 1996 he Narendra Modi government may take up the proposal made by MP Shashi Tharoor to increase the tax exemption limit for pension up to Rs 5 lakh during the ongoing preparation for the Union Budget 2018.

The Narendra Modi government may take up the proposal made by MP Shashi Tharoor to increase the tax exemption limit for pension up to Rs 5 lakh during the ongoing preparation for the Union Budget 2018. This comes at the backdrop of the announcement by the Finance Ministry to form a task force to redraft the over the 50-year-old Income Tax Act, 1961.

Shashi Tharoor tweeted a letter in which he had received a communication from the government on his request of increasing the tax exemption limit for pension up to Rs 5 lakh. The government said that proposal is being examined and the outcome would be reflected in the Finance Bill, 2018.

The letter, dated November 14, said that a pensioner who is above 80 years is not required to pay tax if the total income, including pension, does not exceed Rs 5 lakh. “The suggestion that pension up to Rs 5 lakh per annum should be exempt in all cases would require an amendment to the existing provisions of the Income Tax Act, 1961,” the letter said.

A pensioner, who is a senior citizen — aged 60 to 80 years — is exempt from income tax if the income, including from pension, does not exceed Rs 3 lakh. The work for preparation of the General Budget has already commenced and Finance Minister Arun Jaitley is likely to present it to Parliament in the first week of February, PTI reported.

Last week, the government formed a ‘Task Force’ to draft a new Direct Tax law to meet the present economic needs of the country, an attempt made by CongressP Chidambaram in 2009 through the Direct Taxes Code (DTC). The task force has been given six months to submit its report to the government.

The DTC Bill was introduced in Parliament in 2010 and lapsed with the dissolution of the 15th Lok Sabha. The Bill had proposed annual I-T exemption limit at Rs 2 lakh, and levying 10% tax on income between Rs 2 lakh and Rs 5 lakh, 20% on Rs 5-10 lakh and 30% above Rs 10 lakh. For domestic companies, it suggested tax rate of 30% of business income.

  1. Shyam Sunder Lal
    Dec 3, 2017 at 5:04 pm
    Thanks for this suggestion to Dr Shashi Tharoor. Most elderly senior citizen are not pentioners and have parked their savings in long term bank and government saving scheme to earn income to make their living. Due to the decrease in iterest rates their total income has come down. their living has become a big problem. My request to the authorities that they should exempt this five lakh income for all senior citizens except government pensioners. The government pensioners are fully protected from inflation.
    Reply
    1. D
      Dr gsatyanara
      Nov 29, 2017 at 10:02 pm
      It's a beautiful thoughtand recommendations to the govt . Actually pensioners in today world they are facing unknown problems which they are unable to share it's some kind hearted politicians should always summaries the problems
      Reply
      1. N
        Nagadandayutham
        Nov 29, 2017 at 2:12 pm
        Tharoor has come to the rescue of ageing pensioners. Great. High time IT Act is amended suitably and relief given to the pensioners. Pension is in lieu of PF contribution. Latter is fully exempt from tax whereas pension is fully taxable. This is because IT rules are not defined properly. appeal to Modiji and Jeitleyji to consider the proposal even though mooted by member of the opposition.
        Reply
        1. P
          P d amarnath
          Nov 28, 2017 at 12:49 pm
          I don't think this government will be kind enough to give such a benefit. This is too much to expect from them because pensioners are not a vote bank
          Reply
          1. S
            Sethumadhavan
            Nov 28, 2017 at 12:33 pm
            This is good gesture I would also request you to take up the issue of interest for pension arrears(EPF) based on proprtionate ry.When it was agrred to pay pesnsion based on proprtionate ry, PF subscription arrears with interest were insisted and remitted.But when the pension was increased, interest was not paid for the arrears .This is a unilateral decision where only interest of EPF and not the employee is taken into account
            Reply
            1. R
              Robin Sen Gupta
              Nov 28, 2017 at 11:27 am
              Will this cover ALL pensioners? Both those receiving Pension from a Private Company, [in my case through an annuity purchased by the Company from LIC[ Government employees?
              Reply
              1. B
                B.P.Singh
                Nov 27, 2017 at 6:08 pm
                Exemption of 5L will not serve any purpose unless interest income are clubbed to it.Majority of senior citizens are not getting pension but dependent on interest income only.
                Reply
                1. SURESH MANI
                  Nov 27, 2017 at 5:51 pm
                  AT PRESENT INCOME UPTO 3.00 LAKHS FOR SENIOR CITIZEN ABOVE 60-79 5.00 LAKHS FOR SENIOR CITIZEN ABOVE RESP INCLUDING PENSION IS EXEMPT FROM INCOME TAX.THESUGGESTION MADE BY SHRI SHASHI TAROOR IS FOR PENDION INCOME UPTO 5.00 LAKHS. WOULD INDEED BE A RELIEF TO SENIOR CITIZEN.FURTHER THE INTEREST RATE IS ALSO UNDER DOWNWARD TREND MAKING DIFFICULT FOR SENIOR CITIZEN TO MEET THEIR DAILY NEEDS INCLUDING MEDICAL EXPENSES. THE GOVT SHOULD HIGHLY SUBSIDISE MEDICAL BENEFITS FOR SENIOR CITIZENS AND ALSO DEVISE SPECIAL RATE OF INTEREST SAY 9 PERCENT FOR SENIOR CITIZENS
                  Reply
                  1. Ramchandra Murthy
                    Nov 27, 2017 at 5:25 pm
                    Does it take rocket science or an IIM qualified or CA ins ute qualified person to exempt pension given to a person on retiring. The very fact that pension is classified as income is wrong. If Indian Govt is following all developed countries by implementing low interest rate regime , GST etc then why are not doing the same to pension and also provide honest citizens who have paid income tax all their lives a reprieve form paying Income tax. The Hble PM needs to look into this issue on an urgent basis and set the record right
                    Reply
                    1. S
                      S KRISHNAN
                      Nov 27, 2017 at 3:57 pm
                      This Rs.5 lakhs to be exempted from I T should be total of all income i.e, pension , interest income , annuity pension , PMVVY etc. for all senior citizens ( 60 years and above ) any money credited / each and every in the bank account by way of FD / other interest income should be reflected in the 26 AS statement , irrespective of the fact whether there is T D S or not so that nobody can hide any income - total income can be easily known from 26 AS Statement some way should be found to compensate the reduced interest income of the senior citizens , as the interest is coming down heavily govt. employees , MLAs , MPs get their ry and perquisites increased periodicaly , and govt. pensiners also , but senior citizens who depend only on interest income , are helpless on many counts , tremendously due to tremendous increased cost of living
                      Reply
                      1. Load More Comments

                      Go to Top