Understanding family pension taxation
When a pensioner passes away, a spouse or dependent may receive a family pension. A regular pension is taxed as "Salary", but a family pension is handled differently because the recipient never worked for that employer.
Where to report it
A family pension is not taxed under "Salaries". It goes under "Income from Other Sources".
The deduction number
Family pension gets a standard deduction of one-third of the amount or ₹15,000, whichever is lower (Source: Section 57(iia), Income Tax Act).
| Family pension received | One-third | Deduction (lower) | Taxable |
|---|---|---|---|
| ₹60,000 | ₹20,000 | ₹15,000 | ₹45,000 |
| ₹36,000 | ₹12,000 | ₹12,000 | ₹24,000 |
How the deduction works
Under Section 57(iia), claim the lower of:
- One-third (33.33%) of the family pension, OR
- ₹15,000
Example: a widow receives ₹60,000 a year. One-third is ₹20,000, but the cap is ₹15,000, so taxable family pension is ₹60,000 − ₹15,000 = ₹45,000.
Armed forces exemption
A big exception: family pension to the widow or children of an armed forces member who died in the line of duty is fully exempt from tax.
What you should do
- Report family pension under "Other Sources", never under "Salary".
- Claim the lower of one-third or ₹15,000 as the deduction.
- If it is an armed forces line-of-duty pension, treat it as fully exempt.
Common mistake
Entering family pension under the salary schedule. This is a frequent slip that miscalculates tax and can draw a notice; it belongs under Other Sources.
How LastMinute ITR helps
LastMinute ITR asks about your income sources and routes family pension to Other Sources, applying the ₹15,000 deduction automatically in your deductions while comparing regimes. You file and e-verify on incometax.gov.in.