No standard deduction on family pension

SC Vasudeva

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Q.  Please clarify whether Rs 40,000 allowed as a standard deduction for employees and pensioners is applicable for family pensioners. 

ii) If yes, then an employee who is also drawing family pension will be eligible for standard deduction separately for salary and family pension i.e. Rs 80,000. 

— Suresh Chand Goyal

A.  Standard deduction of Rs 40,000 is deductible against pension received by an ex-employee. The family pension is not covered for such deduction. Your premise that a person would be entitled to deduction of Rs 80,000, if he is receiving pension as well as family pension, is, therefore, not correct.

Q.  Please advise what is the threshold limit for an NRI up to which he is not required to pay income tax and file ITR. — Virendra Sharma

A.  In case of an individual assessee who is an NRI, the maximum amount on which tax is not chargeable is Rs 2,50,000. This limit is applicable for assessment year 2018-19 and for assessment year 2019-20. 

Q.  I have a residential house and have entered into an unregistered lease agreement for the first floor with my wife. Under the lease agreement, she can further sublet the first floor of the house and can receive rent in her own name. Recently, she has sublet the first floor. My query is:

Can she file the income tax return in her name for the rent received by sub-letting the first floor? If so, on which income tax return form she should file? Also clarify whether she shall be entitled to claim one third deduction on rent received, as applicable in case of income from property cases. — Baldev Singh

A.  Income from sub-letting is taxable under Section 56 of the Income-tax Act, 1961 (The Act) as ‘income from other sources’ and therefore the standard deduction of 30% would not be allowable to a person earning income from sub-letting a house property. This reply is based on the presumption that the sub-letting is not considered a sham transaction by the department.

Q.  I am getting EPF pension from provident fund commissioner office and my annual pension is around Rs 25,700.

Kindly advise whether I will also be entitled for standard deduction, as allowed in budget for 2018-19 and if so, how much and how to calculate the same.— Anil Kumar

A.  The pension received from a recognised Provident Fund (managed by PF Commissioner or a recognised trust) is not taxable in view of the provisions of Section 10(11) of the Income-tax Act 1961 (The Act). The exemption is available provided an employee has served for a period of 10 years and the pension is received after completing 58 years of age. The question of any deduction of Rs 40,000 should not arise in case an employee has complied with the above provisions.