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• # Pensioners should be exempted from paying tax to the government - Discuss

Members,
Government employees are the very sincere taxpayers of our country. I feel that the retired government employees drawing pension should not be asked to pay taxes to the government. Tax exemption should be like an incentive given to the retired government staff. As it is, they are drawing only 50% of the salary they have last drawn.

What I propose is - Government should do away with collecting tax from the pensioners. Alternatively, they should consider different formulae to levy tax from the pensioners.

Mostly all the retired government servants would be the senior citizens. Now the tax exemption for senior citizen is like this:
For first 3 lac - Exempted from tax. ,
From 3 lac to 5 lac - 10 percent tax,
From 5 lac to 10 lac - 20 percent tax .
From 10 lac onward - 30 percent tax.

Supposing a pensioner earns 5 lac annually. He needs to pay a tax of Rs. 20,000 per annum (10% of 2 lacs)
Supposing a pensioner earns 7 lac annually. He needs to pay a tax of Rs. 20,000+40,000 =60,000(10% of 2 lacs, and another 20 percent for next 2 lacs)

I think, it is too much for the pensioners to pay a sum of Rs. 60,000 from Rs, 7 lac. (Almost 8.5 percent of the total income)

What I suggest is - Either govt should do away or reduce it proportionately.
A pensioner earning Rs. 5 lac annually should pay only Rs. 10,000 (5 % of two lacs)
A pensioner earning Rs. 7 lac annually should pay only Rs. 10,000 + 20000 = 30,000 (5 percent for the first 2 lacs, and 10 percent for the next 2 lacs)

The Government should create a separate category as pensioners tax and levy only very minimum tax.

Else they should fix a fixed rate of tax, say ONE percent of their total income. If fixed, a pensioner drawing 1 lac would pay the tax of Rs. 1000/- only. A pensioner drawing Rs. 5 lac annually would pay only Rs. 5000/- only. A pensioner drawing Rs. 7 lac would pay only Rs. 7000/- only. It should be a token pension collected from the retired.

Members, What do you say? Can't our good government consider this privilege to the old and retired government staff? If not for all the government staff, it should be considered for the defence pensioners who have served for our country 24x7.
• The suggestions is very good and the pensioners would certainly welcome it. But the amount of disbursement is great and the pensioners are also more and there fore the government would incur more loss through taxes concession.
K Mohan
I consider myself as the learner everyday

• The basic concept of levying income tax is to tax the net income irrespective of the status of the individual. It doesn't matter if the taxpayer is a pensioner or not. There is already a provision for relaxation for senior citizens. Since mostly the pensioners are senior citizens, they automatically get benefits of relaxed norms meant for senior citizens. For the purpose of income tax, the pension is treated as salary only. Therefore the banks which disburse pension are made responsible for the deduction of income tax at source. However, after the demise of the pensioners, the family pension is treated as an 'income from other sources'.
Many pensioners have income from other sources also like interest earned from fixed deposits or rent from property etc. In such cases, the net income is pension plus income from other sources.
Only the pension to officials of UNO is exempt from taxation.
The major pinching factor in the case of taxing pensioners is the fact that many professionals like doctors, lawyers, architects and most of the businessmen, don't pay any income tax despite earning much more than a pensioner.

Let us encourage each other in sharing knowledge.

• Its a nice suggestion Mr. Sun but reducing the tax by half may seem way too extreme for government. If a person paying Rs. 60,000 of tax pays only Rs. 30,000 it may not be a big loss. But, there are many such persons and the total reduction would look like a significant amount of loss to the government. Instead of reducing the tax by half, the tax can be reduced by 25% or 20% which would also be an advantage to pensioners.

And, I didn't get this part "Else they should fix a fixed rate of tax, say 5 percent of their total income. If fixed, a pensioner drawing 1 lac would pay the tax of Rs. 1000/- only. A pensioner drawing Rs. 5 lac annually would pay only Rs. 5000/- only. A pensioner drawing Rs. 7 lac would pay only Rs. 7000/- only." of your thread. Because, 5% of 1 lac is 5,000 but not 1,000 etc,.

• Although I support exemption of pensioners from paying income tax to some extent, there are some pensioners whose pension is much more than the salaries of ordinary people. Moreover, many pensioners continue earning even after retirement. It would not be justified to exempt such pensioners from the purview of income tax.
“Whenever I feel the need to exercise, I lie down until it goes away.” - Paul Terry

• From many recent developments, I am forced to have a horrific feeling that the government is slowly evolving into a commercial corporate. Revenue and profit is the only motive. The need for a social aim has gone away. When even the most capitalist type of governments and nations move over to social benevolence programmes and keeping many key areas under sole public domain, our government is moving away from the benevolent fabric Constitution makers envisaged.

A retired man is humorously referred as a full time husband with half income.( To be gender balanced we may substitute words man and husband with the female equivalents).

It is a time when health is down, but no one gives health insurance. The pensioner has to pay full cost and price, but with half income. Government can do positive discrimination for vulnerable sections. There are many such concessions and grants and compensations to many other sections and categories.Senior citizen and elders are one large vulnerable section. They deserve positive discrimination and have every righto demand that.
Reducing tax rates to corporates and multinationals should not be the priority of a government in India.

I fully support the thread title statement that pensioners should be exempted from all direct taxes. If accepted in principle, ways of implementation and conditions can be thought.
These pensioners were from the very small fraction of honest tax payers when they were in employment. The tax rates in India are much more than any other country. So during their service, they had paid a good amount as various direct taxes like Income Tax, Professional Tax, this and that Cess, surcharge etc. They should not be punished further.

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Let us keep faith on ourselves and work sincerely, not leave everything to fate.

• There are certain other facts related to taxability of income from pension -
1. TDS is not deductible on family pension as the same is treated as 'income from other sources' and therefore section 192 of the Income Tax Act doesn't apply in such cases.
2. Any income as pension / family pension is exempt if the individual has been in the service of Central Government/ State Government and has been awarded Paramvir Chakra or Mahavir Chakra or Vir Chakra or such other Gallantry awards as may be notified.
3. Family pension received by the family members of armed forces, including the paramilitary forces personnel killed in action in certain circumstances, is exempt.

Let us encourage each other in sharing knowledge.

• Krishna,
Sorry , a typo, Kindly read it as one percent instead of five percent. I have edited that line.

No life without Sun ¤

• Mr Sun, Whether it is a Government employee or private, who ever getting salary credited in bank account they are the only person who give the exact tax. SO our statement Government employees are the sincere tax payer is wrong statement. About tax deduction or exemption for government employees for pension, what about the private people? Who do not get pension also. I am not blaming all Government employees, but we all are very much aware more than 90-% Government employees are corrupt and they earn extra money ( bribe) more than their salaries, then why should they get tax exemption for their pension. Hard worker should be rewarded and bribe taker should be punished with cash fine. I am not in favor of this statement,This is not personal but just check your all around how Government officials are working and whether they should get this tax exemption or not?

• Swagathika,
You are right. You said 90 percent government employees are corrupt. Government employees include defence personnel too. According to me, the soldiers; sailors; and airmen are not corrupt. There could be some high ranking corrupt defence officers due to their rank, position, power and trade. I would say 99 percent defence personnel are innocent without any corruption. Hence, I have mentioned that the defence personnel should be considered for exemption. Unlike the civilian government employees, defence service personnel are serving for 24x7 to guard our nation. They should be considered without any hesitation or second thought.

No life without Sun ¤

• One of my relatives earns a salary of Rs.1.5 lakh per month. He is working in private sector. However, the CA employed by his office shows his monthly income as Rs. 42,500/- per month (by tweaking his salary structure). Needless to say. he pays much less tax. This type of change of salary structure is not possible for Govt. employees or Govt. pensioners.
“Whenever I feel the need to exercise, I lie down until it goes away.” - Paul Terry