Will Modi govt exempt tax on pension income up to Rs 5 lakh a year?
The proposal came in after Congress MP Shashi Tharoor drew the attention of the government, while making a request for tax exemption of pension amount upto Rs 5 lakh.
The Narendra Modi government is likely to examine tax exemption option for pensions up to Rs 5 lakh per year during the ongoing preparation for the Union Budget 2018.
The proposal came in after Congress party MP Shashi Tharoor wrote a letter to the government, requesting an annual exemption limit for pension upto Rs 5 lakh.
Replying to the letter, Shiv Pratap Shukla, Minister of State for Finance, has reportedly said the suggestion for exemption of pension income up to Rs 5 lakh would require amendment to the existing provisions of Income Tax Act, 1961.
— Shashi Tharoor (@ShashiTharoor) November 22, 2017
"Accordingly, the proposal would be examined during the exercise for the ensuing Union Budget 2018 and the outcome would be reflected in the Finance Bill, 2018," he said in his reply.
Shukla further said that currently the basic exemption limit for individual tax payer is Rs 2,50,000. However, considering the specific needs, the basic exemption limit for a senior citizen over 60 years of age is fixed at Rs 3,00,000 and for very senior citizen which is above 80 years of age, the same is fixed at Rs 5,00,000.
Thus, a pensioner who is a senior citizen is not required to pay any income tax if his total income, including pension does not exceed Rs 3 lakh. Similarly, a pensioner who is very senior citizen is also not needed to pay tax if his total income involving pension is not above Rs 5 lakh.
Expressing satisfaction over the Minister's reply, Tharoor tweeted, "Govt's semi-encouraging reply to my request to exempt pensioners from tax on the first 5 lakhs of income. Hope @arunjaitley will include this in his next budget."