Pensioners and senior citizens

PENSION

Sections 60 of the CPC and section 11 of the Pension Act define pension as a periodic allowance or stipend given in recognition of prior service, unique merits, etc. As a result, the monthly payment made to a ruler's younger brother was considered a maintenance allowance rather than a pension (Raj Kumar Bikram Bahadur Singh Vs. CIT 75 ITR 227(MP)). There are three crucial characteristics of a "pension."

First and foremost, a pension is a payment for prior service. Second, it has its roots in a previous master-servant or employer-employee relationship. Thirdly, it is paid based on a previous relationship of a service agreement rather than a contract for services.

Pension from previous employment is taxed as "salary." Therefore, pensioners who received their pension from a nationalised bank or in other situations their current Drawing & Disbursing Officers would be eligible for the various deductions available on income earned, including relief under Section 89(1) for the arrears of pension received.

Know about 12a registration.

FAMILY PENSION

According to Section 57, a family pension is a regular monthly sum that the employer will give to a member of an employee's family in the case of the employee's passing. Pension and family pensions differ qualitatively. While the latter is paid to surviving family members after his death, the former is paid to the employee throughout his lifetime.

Family pensions, on the other hand, are taxed in the hands of the nominee as "Income from Other Sources" since there is no employer-employee link between the payer and the payee (s). A deduction of Rs. 15,000 or a third of the family pension is permitted under Section 57(iia), whichever is smaller.

SENIOR CITIZEN

A senior citizen is defined under the Income Tax Act as a person who, at any time during the preceding year, had reached the age of 65 or older. According to the Income Tax Act, older citizens are eligible for the following benefits: -

(i) Special income tax rates for seniors: As explained in chapter 1's paragraph 1.5, senior and extremely elderly individuals are eligible for special income tax rates.

(ii) Benefits offered by the Finance Act of 2007: For older persons, the medical insurance premium deduction allowed under Section 80D would be doubled to Rs. 20,000. Second, the deduction allowed under Section 80DDB for costs associated with treating certain ailments would be enhanced for elderly persons to Rs. 60,000. With effect from April 1, 2013 (A.Y. 2013–14), payments made for the assessee's parents' preventative health are also eligible for a deduction under Section 80D.

Visit section 80g.