21 November 2011
Is arrears of pension received to legal heir(spouse) of a deceased Government servent taxable? & if yes , under which section we can claim deduction on it ??? pension amt-12000pm received arrears for 3 years.
22 November 2011
The Pension is regarded as salary. the salary is taxable on the due basis or received whichever is earlier. The Pension received in arrear is the pension amount of the deceased person. If he had alive then it is taxable as arraer of salary. Section 159 of the I T Act starts with
159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
In the instant case, although the pension became due when he is alive , but it is received after his demise hence it is taxable in the hands of the Legal Representative u/s 159(1) of the Income Tax Act,1961 in the year of receipt of Arrears. She will have to file the return if the gross total income exceeds exemption in the year in which it has been received. Please remember, relief u/s 89 should be claimed , if it is beneficial to that assessee.
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