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Aug 13, 2025
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Big relief for pensioners: Income Tax Bill 2025 brings full exemption on commuted pension
The Income Tax Bill 2025 passed in the Lok Sabha on Monday has brought great relief to government pensioners and many other taxpayers. The new bill clearly provides that the entire amount of commuted pension will be exempted from tax, provided this pension is received from an approved pension fund.
Earlier this exemption was available only to certain categories of employees, while there are many who are not government employees, but voluntarily invest in recognised pension funds. So, the new bill has eliminated this difference and cleared the way to give equal tax relief to all eligible pensioners.
What is commuted pension?
Commuted pension means taking a lump sum amount instead of monthly installments of pension. For example, if a pensioner wants to take his future pension of 10 years in one go, then it is called commuted pension.
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