Hi,

Pension received by a family member is taxed under the head “income from other sources”. It is taxed in the hands of the receiver.

• Commuted Pension i.e lump sum amount of pension is not taxable.
• uncommuted pension received by a family member is exempt to a certain extent. Rs. 15,000 or 1/3rd of the uncommuted pension received – whichever is less is exempt from tax.

For example – If a family member receives a pension of Rs 1,00,000 during the year then the exemption available is least of – Rs 15,000 or Rs 33,333 (1/3rd of Rs 1,00,000). Thus the taxable family pension will beRs.85,000 (Rs 1,00,000 – Rs 15,000)