• A pension is a regular payment provided to an individual in return for services rendered throughout their career. This payment counts as taxable income under the category of ‘Salaries’ on your income tax return. This article discusses the applicability of income tax on pensions in India.

1. Uncommuted Pension: An uncommuted pension is one that is dispensed at consistent intervals. Any funds received as an Uncommuted Pension are fully taxable, regardless of whether the recipient is a government or non-government employee.
2. Commuted Pension: Commuted refers to the act of changing employment. Many organizations allow an employee to obtain a lump-sum amount by forgoing part of the pension. Money received in this manner is referred to as a commuted pension. The pension can be either fully or partially commuted.

How Does Commuted and Uncommuted Pension Get Taxed? Here are some essential points you need to be aware of regarding the taxation of commuted and uncommuted pensions to answer the question, ‘Is Pension Taxable? ’:

• Uncommuted pensions, along with any other regular pension disbursements, are completely taxable as salary. In some instances, a commuted or lump-sum pension may qualify for exemption. A commuted pension is entirely tax-exempt for government employees and partially exempt for those in the private sector. If a pension is received together with a gratuity, one-third of the pension amount that would have been received if the full pension had been converted is exempt from taxation, while the remaining balance is subject to taxation as salary.

• The Indian government offers individual income tax forms in four different versions. Among these four, ITR 1 and ITR 2 are the two forms applicable to retirees. This addresses your question – ‘Is pension taxable? ’

Income Tax For Senior Citizens Pensioners (Above age 60 but less than 80 years)

• Here are the income tax rates for senior citizens pensioners:
• For annual pension income up to Rs. 3 lakhs – Nil
• For annual pension income between Rs. 3 lakhs and Rs. 5 lakhs – 10%
• For annual pension income between Rs. 5 lakhs and Rs. 10 lakhs – 20%
• For annual pension income exceeding Rs. 10 lakhs – 30%

• Change in Income Tax Return Rule in 2021 Finance Minister Nirmala Sitharaman announced in the Union Budget 2021 that retired individuals above the age of 75 will not be required to file income tax returns for the fiscal year 2021-2022. This rule is applicable to seniors over 75 whose sole income source is a pension.

Benefits of Pension Plans Pension and retirement schemes offer various advantages that can protect your family while providing you with retirement savings. Below are the primary benefits of pension plans:

1. Guaranteed Income Pension plans can enable you to secure a steady income after retirement, ensuring a financially independent lifestyle. You can employ a retirement calculator to estimate your post-retirement needs.
2. Death Benefit
   The death benefit is also included in pension plans to provide financial security for your family in your absence. A lump sum payment is given to the nominee if you unfortunately pass away.
3. Flexibility in Payment of Premiums

You have the ability to select your premium payment term according to your financial objectives and needs.

4. Riders
   By adding riders, you can increase the coverage of your pension plan. This can assist in offering extra coverage for you and your family.
5. Tax Benefits 4
   The reply to the inquiry – ‘Is pension taxable? ’ is Yes. However, pension plans also offer tax advantages as they are eligible for tax deductions under section 80CCC of the Income Tax Act, 1961. Tax deductions up to Rs. 1. 5 lakh can be claimed on the acquisition of a new policy or on the payments for renewing an existing policy. 4Tax benefits are subject to current tax laws and may change.

Axis Max Life Pension Plans
Below are some of the Axis Max Life Pension Plans: –

1. Guaranteed Lifetime Income Plans (GLIP)
   GLIP is an annuity plan that guarantees regular income to assist you in achieving your financial goals. You are required to make a single premium payment only. Based on the annuity rates at that time, you can begin receiving your annuity either immediately or later, depending on whether you opt for the immediate or deferred annuity option.

• You can also add your partner to this plan, so they can continue to receive the annuity even in your absence. Additionally, the death benefit can be included in this plan, which is paid as a lump sum to the nominee after the last survivor (annuitant) has passed away. Furthermore, the death benefit is at least 105% of the purchase in the case of the deferred annuity option.

2. Forever Young Pension Plans (FYPP)
   FYPP is a unit-linked pension plan that offers market-linked growth to help you accumulate a sufficient corpus. The premium can be paid either regularly or as a lump sum at the policy’s commencement.

• The maturity value under this plan is based on your selected investment. For the Pension Preserver Fund, the higher of the fund value or 110% of the total premium paid is payable. In the Pension Maximiser Fund, the higher of 101% of the total premiums paid or the fund value is payable upon maturity.

3. Axis Max Life Saral Pension Plan
   Axis Max Life Saral Pension is a Non Linked, Non Participating single premium individual immediate annuity plan that ensures you have a consistent income after retirement. Under this plan, you can choose between Single Life annuity and Joint Life annuity. The death benefit is provided to the nominee in the event of the annuitant’s passing, resulting in the termination of the policy. It also allows you to receive your annuity payments monthly, quarterly, half-yearly, or yearly.