How Can You Avoid TDS On Pension?

Earnings through pension are usually considered under Tax Deducted at Source (TDS). If your annual income is lower than basic threshold of exemption, there are certain bypasses you can make. This can be done with a self-declaration form. You can submit Form 15G or Form 15H to the bank or organization that disburses your pension. The relevant form is determined by your age and income bracket.

For Senior Citizens Above 60

1. Send Form 15H:

   As a resident senior citizen, if your total income for the financial year falls below the exemption threshold, you may file Form 15H with your bank that issues your pension. This document states that your tax obligation is zero, guaranteeing that no TDS is withheld from your pension.

2. Increased Exemption Thresholds:

   In the Old Tax Regime, the fundamental exemption threshold is ₹5,00,000 and ₹3,00,000 for people who are above 80 years and 60 years respectively.

3. Familial Retirement Fund:

   No TDS is withheld from family pension earnings. Nonetheless, the recipient is required to declare it as “Income from Other Sources” when submitting their Income Tax Return (ITR).

4. ITR Exemption for Senior Citizens:

   Senior citizens residing in the area who are 75 years or older do not have to submit an ITR if their sole income comes from pension and interest accrued from the bank that withholds and pays the tax.

For Individuals Under 60 Years of Age

If you are under 60 and your total earnings are less than ₹2,50,000 (according to the Old Tax Regime), you may provide Form 15G to your pension-paying bank to avoid TDS deductions.

For Every Retiree

Turn in Forms Punctually:

To prevent TDS during the year, file Form 15G or 15H at the start of each financial year. The majority of banks permit online submissions via internet banking platforms.

Assert Deductions to Lower Tax:

Although your pension may be subject to taxes, you can lessen your total liability by utilizing the deductions that are available.

• Basic Deduction: ₹50,000 for retirees
• Section 80C: Maximum ₹1.5 lakh for investments such as Public Provident Fund (PPF)
• Section 80D: Tax deduction for health insurance premiums (increased limit for elderly individuals)
• Section 80TTB: Senior citizens can receive a deduction of up to ₹50,000 on interest income.

Pension Paid in a Lump Sum:

When you obtain a lump-sum pension, the tax exemption differs:

• Employees of the government: Total sum is exempt from taxes.
• Employees not employed by the government: Exemption is contingent on whether you also obtain gratuity.

In the Event That TDS Has Already Been Subtracted

If TDS has already been taken from your pension and your overall income falls under the taxable threshold, there's no need to be concerned. You can obtain a refund by submitting your Income Tax Return for that fiscal year.