Income from other sources. ₹15K standard deduction OR 1/3 of pension (whichever lower). Allowed in BOTH regimes. Most recipients eligible for ZERO tax under 87A.
FAMILY PENSION = pension received by FAMILY MEMBER (spouse, children) after death of pensioner. TAX TREATMENT: (1) Categorized as INCOME FROM OTHER SOURCES (not salary). (2) Section 57(iia) STANDARD DEDUCTION available. (3) ALLOWED IN BOTH OLD + NEW REGIMES (rare new regime exception). (4) WHO PAYS: government, employer, EPFO. (5) RECIPIENT: spouse first, then children. (6) AMOUNT: typically 30-50% of pensioner's pension.
FAMILY PENSION DEDUCTION (Section 57(iia)): LOWER OF: (1) ₹15,000 ANNUALLY (raised from ₹15K — check current). (2) 1/3 OF FAMILY PENSION. EXAMPLE 1: ₹40K monthly family pension = ₹4.8L annually. (a) 1/3 = ₹1.6L. (b) ₹15K cap applies. (c) DEDUCTION ₹15K. (d) Taxable: ₹4.65L. EXAMPLE 2: ₹3K monthly = ₹36K annually. (a) 1/3 = ₹12K. (b) ₹15K cap. (c) LOWER ₹12K. (d) DEDUCTION ₹12K. (e) Taxable: ₹24K. STRATEGIC: most family pension recipients get ₹15K cap.
REGULAR PENSION (paid to retired employee): (1) TAXED AS SALARY. (2) ₹75K standard deduction (new regime salaried). (3) Slab rate applies. FAMILY PENSION (paid to family member after death): (1) TAXED AS INCOME FROM OTHER SOURCES. (2) Section 57(iia) ₹15K deduction. (3) Slab rate applies. KEY: family pension recipient gets ₹15K deduction (instead of ₹75K standard). LESS BENEFICIAL but distinct category. Government employees + private + EPFO pensions all eligible.
FAMILY PENSION + OTHER INCOME: (1) FAMILY PENSION taxed at slab rate combined with all other income. (2) DEDUCTIONS available separately for family pension (₹15K) + others (e.g., 80C for old regime). (3) 87A REBATE applicable if total income ≤ ₹7L (new regime) / ₹5L (old regime). EXAMPLE: ₹3L family pension + ₹50K bank interest = ₹3.5L total income. Less ₹15K deduction = ₹3.35L. Slab tax minimal due to basic exemption + 87A rebate. ZERO TAX likely if total < ₹7L. STRATEGIC: widow receiving family pension often has minimal tax burden.
FAMILY PENSION STRATEGY: (1) CLAIM ₹15K deduction annually. (2) NEW REGIME allows this deduction (rare exception). (3) FILE ITR if family pension > ₹2.5L (basic exemption). (4) MAY have ZERO tax under 87A if total income < ₹7L (new regime). (5) SCSS + POMIS investment of pension corpus for additional income. (6) PPF + tax-efficient instruments. (7) HOUSE PROPERTY income separate. (8) MEDICAL EXPENDITURE 80D deductions (old regime). (9) FORM 15H to avoid TDS if total income < tax-exempt limit. (10) MAINTAIN PENSION ORDER + bank statements as proof. STRATEGIC: family pension recipients often eligible for ZERO tax burden. ENGAGE CA for first ITR + setup.