Incomes that are not taxed in India (Family Pension? LIC policy benefit? Encashed Leaves on retirement?)

POSTED BY Deepthy ON December 8, 2012 12:51 am ONE COMMENT

I was “googling” for tax free returns and came across some good articles including “16 incomes that are not taxed in India”, most of which are also covered in this blog in separate sections.


To share a few interesting tax-free Retirals heads that took me by surprise were that upto 10months leave encashments (upto 3Lakhs) are tax free on your retirement, so is your gratuity upto 10Lakhs & 1/3rd of your superannuation if you have gratuity (&1/2 superannuation if you don’t have gratuity). Pleasant surprise, some of these will be!


Had a couple of queries:


1) Most important is if regular PF widow pension taxable? (Not military but regular widow pension from demised spouse’s PF)


This one keeps returning to me. I always thought one had to pay tax on the widow pension that a wife receives from demised spouse’s EPF, as I have heard Tax Consultants advise people and which I have passed on to others. But I keep encountering the statement on the web (including in ’16 incomes that are not taxed in India’) that this type of pension is not taxable. 


Quoting from the said article, one category of non-taxable benefit is “Retirement/death gratuity: Any payment received under a pension or death-cum-retirement gratuity scheme by an individual or his widow, children or dependents.”


The contradicting statements from net & tax consultants are confusing. 


2) Are Life Insurance policy benefits non-taxable? Somewhere it says including bonus are taxable? Is this applicable to all Endowment policies?


Could someone who knows these tax aspects clearer please throw some light on them.



One reply on this article “Incomes that are not taxed in India (Family Pension? LIC policy benefit? Encashed Leaves on retirement?)”

  1. Normal family pension is taxable as income from other sources. Lumpsum received by widows while husband is in service is tax free.

    For policies which come under section 10(10D) of IT act maturity proceeds are tax free
    All endowment policies will fall under this.

    Pension polices which provide annuities are unlikely to part of this. You would need to check the policy wrt it section

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