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What is commuted and uncommuted pension?

(Guest)

Can anyone please explain, what is commuted and uncommuted pension?. How it is to be treated while calculating tax liability for AY 2011-12 Thankyou

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9 Replies

amit jain (Chartered Accountant) (532 Points)
Replied 22 November 2011

commuted pension means the lumpsum amount received and uncommuted means which is received in instalments

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Sailza (STUDENT) (33 Points)
Replied 22 November 2011

Following is exempted from Commuted pension:

1/3 of the total pension.(If he also receives gratuity) or 2/3 of total pension(If he doesnt receive any gratuity)

Uncommuted pension is always taxable.

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(Guest)

Thankyou Sir, Why is it related to gratuity?, Calculation of taxable pension differs, if gratuity received, and it will be different if gratuity not received.. Please clarify, Amit Sir..

Z ( ) (2965 Points)
Replied 22 November 2011

It is related to gratuity because for calculating the exemption for Pension u/s 10(10A) , if the assesse who has received gratuity also then his exemption limit is

Commuted amount / % of commutation x 100 x1/3

Otherwise

Commuted amount / % of commutation x 100 x1/2

Those who receive gratuity also, receive less exemption on pension

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(Guest)

Thanks Amit sir, Saliza, Z, for clearing my doubt, Thanks CCI

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Tripti ( CA, MBA, CPA) (no) (132 Points)
Replied 23 November 2011

Uncommuted pension - Fully taxable

Commuted pension -

a) Govt employee - Fully exempted

b) Non - Govt employee ( received gratuity also ) - 1/3 of Full value of pension

c) Non - Govt employee ( not received gratuity ) - 1/2 of Full value of pension

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kiran (CA FINAL) (80 Points)
Replied 23 November 2011

COMMUTED PENSION : CERTAIN % OF PENSION TO BE RECEIVED IN FUTURE IS COMMUTED

BY THE RETIRED ONE. WHAT EVER THE AMOUNT COMMUTED RECEIVED IN LUMSUM IS

EXEMPTED IN THE HANDS OF GOVT EMPLOYEES.

IN CASE OF PRIVATE EMPLOYEES 1/3 OR 1/2 OF PENSION WHICH HE IS ENTITLED TO

RECEIVE IS EXEMPTED.

EG. PRIVATE EMPLOYEE COMMUTED 25% & COMMUTED PENSION IS rS. 50000. THE 1/3 OR 1/2

OF (50000/25%) IS EXEMPTED.

UN COMMUTED PENSION: WHICH MEANS REGULAR AMOUNT OF PENSION RECEIVED BY

RETIRED ONE EVERY MONTH WHIS IS TAXBLE AS SALARY .

KIRAN KUMAR TULVA

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SAPAN KUMAR PAUL (Officer In-charge) (21 Points)
Replied 03 October 2015

Dear Sir,

Would u please explain in details about the pension recd. by my father for the month of September'15 as per the following particulars.

1. BASIC : 7561

2. DA : 8544

3.MED : 500

4. OTHERS : 0

5. COMMUTED : 2007

6. INCOME TAX DEDDUCTION : 0

7. NET PENSION : 14598 CREDITED ON 28/09/2015

With regards & best wishes,

Sapan Kumar Paul

Ghanshyam Lohar (ACCOUNTANT) (60 Points)
Replied 03 June 2021

If someone does not cummuted of his pension during his retirement and after some time he and her wife gets mishappening then Will his children's eligible to get commutation of pension ?