Deduction of Rs 40,000 applicable to pensioners, clarifies CBDT

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New Delhi | Published: April 6, 2018 4:09:23 AM

The Central Board of Direct Taxes (CBDT) on Thursday clarified that the pension received by a taxpayer from a former employer is taxable under the head ‘salaries’, which would allow such assessees to avail Rs 40,000 deduction for computing taxable salary.

CBDT, pension, pensioners, taxpayer, income tax, money newsThe Central Board of Direct Taxes (CBDT) on Thursday clarified that the pension received by a taxpayer from a former employer is taxable under the head ‘salaries’, which would allow such assessees to avail Rs 40,000 deduction for computing taxable salary.

The Central Board of Direct Taxes (CBDT) on Thursday clarified that the pension received by a taxpayer from a former employer is taxable under the head ‘salaries’, which would allow such assessees to avail Rs 40,000 deduction for computing taxable salary. “Accordingly, any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000 or the amount of pension, whichever is less, under Section 16 of the Act,” the board said in a statement. In the Budget, finance minister Arun Jaitley had introduced Rs 40,000-standard deduction for salaried employees and pensioners, replacing the exemption given for transport and medical expenses that was applicable till FY 18. The board said it had received representations as to whether a taxpayer, who receives pension from his former employer, shall also be eligible to claim this deduction.

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