When Can Pensioners Avoid The TDS Burden? What You Need To Know

One of the key sources of income post-retirement is pension, which is taxed in India as per the income slab. Knowing how different types of pensions are taxed and how to reduce tax deducted at source (TDS) will help you manage your finances better and save more. Let’s understand the tax implications on pensioners pension income and situations where you can evade TDS burden. Also Read: Sebi Receives 17,892 Complaints Against RIAs Since 2011; ‘Tips And Trading Calls’ Top Grievance: Report

Taxability of Pension in India:

The taxation rules on pension income depend on the type of pension individuals receive, for instance, whether commuted or uncommuted.

1. Uncommuted Pension (Regular Pension):Uncommuted pension is received at intervals and is taxed as per the individual’s income slab under the head, “Income from Salaries”. It gets added to your total annual income and is taxed accordingly.
2. Commuted Pension: A commuted pension is a lump sum amount an individual receives instead of a regular pension. This pension is either fully or partially tax-free.

How to Reduce TDS on Pension?

TDS will not apply if the total pension income or the overall annual earnings doesn’t cross the basic exemption limit of Rs3 lakh for senior citizens (60 and above) and Rs5 lakh for super senior citizens (80 and above). Following are the ways one can avoid TDS on pension income.

1. Submit Form 15H of 15G

If the annual income doesn't fall within the taxable limit after deductions and exemptions, seniors can submit Form 15H to the bank or the pension disbursing authority. It informs them that their income is less than the taxable limit, so they do not deduct TDS. People of other age groups can submit Form 15G if their annual income doesn't exceed the taxable limit. Deductions are available under sections 80C, 80D, 80TTB, etc., under the Act, which reduce the tax liability.

2. Rebate under Section 87A

One can claim a tax rebate of up to Rs12,500 under Section 87A if the taxable income is up to Rs5 lakh in the old regime. Also Read: EPFO To Migrate To New IT System In 3 Months To Address Member Grievances: Check Benefits

3. Form 10-IE for New Tax Regime

Pensioners can choose between the old and new tax regimes. The old regime allows deductions and exemptions, which reduces tax liability, while the new regime has reduced tax rates without exemptions. Finally, although the pension income is taxed in India, knowing how to reduce the TDS burden will help you save more and better manage your finances. You could also seek professional help to achieve these goals.