Commuted pension amount is tax-free
SC Vasudeva
I am a Haryana Government pensioner and getting gross annual pension of Rs 9,24,000. I got my pension commuted and got Rs 11 lakh as commutation benefit and a sum of Rs 11,000 per month is being deducted from my pension. So my net pension is Rs 7,92,000 (Rs 9,24,000-Rs 1,32,000). My pension disbursing officer is showing Rs 9,24,000 as annual pension whereas I am getting Rs 7,92,000. What is my taxable income? Is it Rs 9,24,000 or Rs 7,92000? Please advise. — PS Mehta
A. The amount received by you towards the commutation of pension is not taxable. The amount of taxable pension should be Rs 7,92,000, which is being received by you.
My son-in-law, who is in the US, filed a divorce case from my daughter in 2012, which was dismissed in 2014. The case is pending with the high court in Chandigarh for the past three years. My son-in-law wants to settle the case out of court. I have following queries:
a) Is there any income tax payable on the alimony received? This includes amount in lieu of the gold given by us at the time of her wedding and afterwards. My daughter is not having any income except Rs 7,000 per month pendente lite from the court.
b) Please guide us about the best method of receiving the alimony.
c) As the boy is in the US, whether any tax will be deducted there also. I want to add that the divorce case was filed through his power of attorney sister who is in India. Please advise. — Mohinder Sharma
A. On the basis of the facts given in the query, it would be advisable to receive a lump sum amount towards alimony. The amount so received would not be taxable in the hands of your daughter. In case she has any children from the marriage with your son-in-law, it would be advisable to seek the expenditure on the education of the children which should be paid directly by your son-in-law to the school/college so as to avoid the taxability thereof.
The issue with regard to the taxability of lump sum to be paid by your son-in-law in America will have to be checked up with an American tax consultant.
The Central government retirees are eligible for Rs 1,000 per month as fixed medical allowance (FMA) for self and spouse. If they don't avail the FMA, they are allowed free medical treatment without any financial limits at the nearest designated government hospital. For reasons such as government hospital located far away or not adequately equipped, people may opt for FMA. Is this meagre amount of FMA taxable or should it be taxable at all? — Tejinder Singh Kalra
A. Fixed medical allowance would not be taxable provided you are able to provide evidence that the amount received has been actually spent for the medical expenses for self and the family. It may be taxable in case it is not possible to provide evidence for the incurrence of such allowance towards medical expenditure.
