Pension Govt. Employee (Case B) Commuted Pension Assessee receives Gratuity (Case C) Other Employee Assessee does not receive Gratuity (Case D) Case A: Uncommuted pension Uncommuted pension is fully tu employee - mil employees whether Government or Non-Government f14 Case B: Commuted pension received by a Government employee Commuted pension received by a Government employee is fully exempt from tax u/s 10(10A)(0 Note: Government employee here includes employee of the Central or State Government, Local authority as well as employee of Statutory corporation. Judges of the High Court and the Supreme Court are also entitled to the exemption Circular No.623 dated 6/1/1992] Case C: Commuted pension received by an employee who also received gratuity (Sec. 10(10A)()] One third of total pension (which assessee is normaly entitied for) commuted is exempt Taxpoint: It is immaterial whether the employee is covered by the Payment of Gratuity Act or not. Case D: Commuted pension received by an employee who does not receive gratuity [Sec. 10(10A) ()] One half of total pension (which assessee is normally entitled for) commuted is exempt. Notes a) Pension received by a widow or legal heir of a deceased employee shall not be taxable as salary but taxable u/s 56 as income from other sources (further refer chapter Income from other sources") b) Where commuted pension is taxable, relief u/s 89 is available. c) Pension received from United Nations Organisation is not taxable. Further, pension received by a widow of the United Nations ex-officials from UN Joint Staff Pension Fund is also exempt ILLUSTRATION 7 Mr. Amit has retired from his job on 31/3/2018. From 1/4/2018, he was entitled to a pension of 3,000 p.m. On 1/8/2018, he got 80% of his pension commuted and received 1.20,000. Compute taxable pension if he is: Case a) Government employee Case b) Non-Government employee & not receiving gratuity Case c) Non-Government employee (receiving gratuity, but not covered by the Payment of Gratuity Act)