Saturday, December 31, 2011

Is family pension also treated as salary? Is TDS deductible on family pension

on Saturday, December 31, 2011

No. As there is no employer-employee relationship between the recipient of the family pension and the payer, family pension is not salary. It is taxed under the head 'Income from Other Sources'. In respect of family pension received from the employer by a person belonging to the family of the employee in the event of the employee's death, a standard deduction of 1/3rd of the family pension or Rs.15,000 whichever is less is allowed as a deduction. 

Accordingly TDS is not deductible on family pension at all.So person receiving family pension have to deposit their tax themselves. However if family pensioner is also receiving salary then he may declare his family pension as "income from others sources" to his employer for tax deduction.This is a option to the family pensioner and employer can not press family pensioner to offer other income to deduct tax.