1. Income Tax Dept. has clarified that if a taxpayer receives pension from a former employer, it is taxable under the head ‘Salaries’.
2. Therefore, the taxpayer can claim a Standard Deduction of Rs.50,000 or the pension amount, whichever is less.
3. As pension income from earlier employer(s) has been clubbed under "Salaries" for income tax calculations, it means that Standard Deduction of 50,000 is, therefore, the maximum amount that can be reduced by taxpayers from their gross salary income, i.e. sum of salary from existing employer, if any, and pension income from earlier employer(s).
4. The current Standard Deduction has only replaced erstwhile medical allowance of 15,000 per annum and transport allowance of 1,600 per month, which were also earlier deducted from gross salary and claimed as an exemption.
2. Therefore, the taxpayer can claim a Standard Deduction of Rs.50,000 or the pension amount, whichever is less.
3. As pension income from earlier employer(s) has been clubbed under "Salaries" for income tax calculations, it means that Standard Deduction of 50,000 is, therefore, the maximum amount that can be reduced by taxpayers from their gross salary income, i.e. sum of salary from existing employer, if any, and pension income from earlier employer(s).
4. The current Standard Deduction has only replaced erstwhile medical allowance of 15,000 per annum and transport allowance of 1,600 per month, which were also earlier deducted from gross salary and claimed as an exemption.