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What is Family pension?
If you are receiving family pension after the death of a government employee or private sector employee, it is important to understand how this income is treated for income tax purposes. Many pensioners or their legal heirs are often unsure whether they need to file an income tax return and under which ITR form this income should be reported.
Family pension is not treated the same way as regular pension or salary income. Filing an income tax return becomes necessary if your total income, including family pension, crosses the basic exemption limit.
In this guide, we explain who should file ITR for family pension, which ITR form is applicable, what deductions are allowed and the step-by-step process for filing your return correctly on the income tax portal.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
What is Family pension?
Family pension is a monthly payment made by the employer to the spouse or legal heir of a deceased employee as a financial support after the employee’s death. It is commonly received by widows, children, or dependent parents of government or private sector employees who were eligible for a pension. Unlike regular pension received by a retired employee, family pension is not considered salary income.
Taxation of Family pension
Income received as family pension is taxable under the head Income from Other Sources and not under salary. The Income Tax Act allows a standard deduction of one third of the family pension or ₹15,000, whichever is lower. The remaining amount is added to the total income of the recipient and taxed as per the applicable income tax slab rates. No TDS is generally deducted on family pension, but if total income exceeds the basic exemption limit of ₹2,50,000, filing of income tax return is mandatory. Senior citizens and family members receiving such pension should carefully report it while filing ITR to avoid future income tax notices.
Example: Let’s consider an example to illustrate the calculation of taxable family pension: If a family member receives a pension of Rs. 1,00,000, the exemption available would be the least of:
- Rs. 15,000
- Rs. 33,333 (1/3rd of Rs. 1,00,000)
In this case, the exemption available is Rs. 15,000. Thus, the taxable family pension would be: Rs. 1,00,000 – Rs. 15,000 = Rs. 85,000
Taxability of family pension received by widow
Family pension received by a widow after the death of a government or private sector employee is taxable under the head Income from Other Sources. It is not treated as salary income since the recipient is not rendering any service. The Income Tax Act allows a standard deduction of one-third of the family pension or ₹15,000, whichever is lower. The balance amount is added to the widow’s total income and taxed as per the applicable slab rates. If her total income after deductions exceeds the basic exemption limit, filing of income tax return is mandatory. No TDS is usually deducted on family pension, so advance tax or self-assessment tax may be required if tax liability arises.
Taxation of Commuted or Lump Sum Pension
This is a case if the Pensioner is alive whose pension is taxable as Salary. Commutation refers to converting a part of the pension into a lump sum payment. If the pension received by a family member is commuted or received as a lump sum payment, taxability is determined by whether the person is a government or private employee.
Commuted or lump sum pension received by a government employee is tax free.
For non-government employees, the tax treatment of commuted pension depends on whether gratuity is also received.
- If both gratuity and pension are received, 1/3rd of the commuted pension is exempt if 100% of the pension was commuted.
- If only pension is received without gratuity, and 100% of the pension was commuted, then 50% of the pension amount is exempt.
Taxation of Uncommuted Pension
This is a case if the Pensioner is alive whose pension is taxable as Salary. Uncommuted pension or any periodical payment of pension is fully taxable as salary.
What are Deductions and exemptions available toFamily Pensioner?
Standard deduction of one third of the family pension or ₹15,000, whichever is lower
Deduction under Section 80C for eligible investments and payments (like LIC, PPF, ELSS, etc.) upto Rs. 1.50 lakhs
Deduction under Section 80D for health insurance premium paid for self and family
Deduction under Section 80TTB (up to ₹50,000) on interest from savings and fixed deposits, if the pensioner is a senior citizen
Deduction under Section 80G for donations made to eligible charitable institutions
Deduction under Section 80TTA (up to ₹10,000) on savings account interest, if the pensioner is below 60 years of age
Income tax Slab rates for family pension
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Which ITR form is applicable for family pensioner?
Family pensioners can file ITR-1 if their total income is up to ₹50 lakh and includes family pension (taxable under Income from Other Sources), income from salary or pension, income from one house property, and interest income.
However, if the total income exceeds ₹50 lakh or includes capital gains, foreign assets, more than one house property, or if the assessee is a director in a company, then ITR-2 should be used.
Choosing the correct ITR form is essential to avoid processing delays or notices from the Income Tax Department.
Benefits of ITR Filing for Family pensioners
Helps to claim income tax refunds, if any excess TDS or advance tax was paid
Acts as valid proof of income for home loan, personal loan, business loan, credit card and term insurance
Acts as valid proof of income for visa applications and government tenders
- Enables carry forward of business or capital losses to future years
Avoids penalties and notices for non-filing if income exceeds the basic exemption limit
ITR filing process for Family pensioners
Visit the official portal
Go to www.incometax.gov.in/iec/foportal/ and log in using your PAN (user ID) and password.Navigate to e-File
Click on the e-File tab and select Income Tax Return from the drop-down menu.Select the relevant assessment year
Choose the correct Assessment Year (example: AY 2025-26 for FY 2024-25).Choose the online or offline mode
For most pensioners, the online mode is simpler. Select Online mode and click Continue.Select the applicable ITR form
Choose ITR-1 if total income is up to ₹50 lakh and includes family pension, salary or one house property. Choose ITR-2 if income exceeds ₹50 lakh or includes capital gains or multiple properties.Fill personal and income details
Enter basic details, pension amount under “Income from Other Sources”, and other income like bank interest.
Apply the standard deduction of ₹15,000 or one-third of family pension (whichever is lower).Claim eligible deductions
Go to the deductions section and enter details under Sections 80C, 80D, 80TTB, etc., if applicable.Validate tax computation
The portal will auto-calculate the tax liability. Verify the summary and ensure all income and deduction details are correct.Preview and submit
Review the entire ITR, make corrections if required, and then submit.E-verify the return
Complete the process by choosing an e-verification method like Aadhaar OTP, net banking, or EVC. This step is mandatory for return processing.
Once submitted and verified, download the ITR-V acknowledgement for your records.
Due date of ITR filing for Family pensioner
The Due date to file Income tax return for FY 2024-2025 (AY 2025-2026) is 31st July,2025 which is extended to 15 th September, 2025.
In case you miss this deadline then you can file belated ITR till 31st December, 2025 with late fees.
Also for any mistake made while filing ITR before due date, you can make corrections by filing Revised ITR any number of times till 31st December, 2025
If you miss deadline of Belated income tax return filing then you can file Updated ITR (ITR U) till 4 years from the end of relevant assessment year with late fees and additional taxes.
Looking for help?
Whether you are receiving family pension or have other income sources, A R Dhorajiya & Co. offers expert and hassle-free ITR filing services tailored to your needs. Ensure all deductions are claimed, forms are correctly selected, and returns are filed without error.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
Family pension should be reported under the head Income from Other Sources in the income details section of the ITR form.
Uncommuted pension refers to the regular monthly pension received after retirement. It is fully taxable under the head “Salary”.
Family pension is taxed after allowing a standard deduction of ₹15,000 or one-third of the pension amount, whichever is lower. The remaining amount is added to total income and taxed as per slab.
Yes, it is taxable under the head Income from Other Sources, after the standard deduction.
ITR-2 is applicable if total income exceeds ₹50 lakh or if there are other incomes like capital gains or more than one house property. Otherwise, ITR-1 is sufficient.
Family pensioners can file ITR through the income tax portal by selecting the applicable ITR form, reporting income correctly, claiming deductions, and completing e-verification.
It is the amount received by a legal heir (usually a spouse or child) after the death of a government or private employee, taxable under “Income from Other Sources”.
Generally, ITR-1 is applicable if total income is up to ₹50 lakh and no capital gains or multiple properties exist. Otherwise, ITR-2 should be used.
There is no full exemption. A standard deduction of ₹15,000 or one-third of family pension, whichever is lower, is allowed.
Yes, if total income (after standard deduction) exceeds the basic exemption limit (₹2.5 lakh, ₹3 lakh, or ₹5 lakh depending on age), filing ITR is mandatory.
Yes, but only under “Income from Other Sources”. The deduction is limited to ₹15,000 or one-third of the pension, whichever is lower.
Under the new tax regime, most deductions are not allowed. However, the standard deduction on family pension is still available. One can choose between old and new regimes while filing.
First, reduce the standard deduction (₹15,000 or one-third of pension, whichever is lower) from the total pension received. The balance is added to other income and taxed as per applicable slab.
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Happy with the outcome.
Thank you!
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