💰 Tax Savings · Tax-free income (Section 10)
Commuted pension — tax-free lump sum (Section 10(10A))
✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26
In short
A commuted (lump-sum) pension is exempt under Section 10(10A) — fully for government employees, and one-third to one-half for others.
How much is exempt
- Government employees: the commuted pension is fully exempt.
- Others, if you also receive gratuity: 1/3 of the full commuted value is exempt.
- Others, no gratuity: 1/2 is exempt.
The regular monthly (uncommuted) pension remains taxable as salary. Family pension is taxed under 'other sources' with its own deduction.
The law behind it
Section 10(10A)
General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions
change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.
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