Fact-check notes
Last fact-checked: 2026-05-30
Tax caution: AY 2026-27 covers FY 2025-26 and continues under the Income-tax Act, 1961. Tax Year 2026-27 and new-form references should be verified against official utilities before filing.
Use this page as preparation guidance. A professional should verify the active law year, notification, portal utility and source records before filing or taking a tax position.
What this covers
Commuted pension is a lump-sum pension conversion item with different tax treatment from monthly pension. The exemption depends on employer type and gratuity status.
- Monthly uncommuted pension is generally taxable as income.
- Government commuted pension is usually fully exempt.
- Private-sector exemption depends on whether gratuity is also received.
- Retirement-year planning should combine gratuity, leave encashment, VRS and pension entries.
Who this is for
- Retiring government employee.
- Private-sector employee commuting pension.
- Pensioner reviewing Form 16.
- CA computing retirement-year ITR.
Documents and data to verify
- Pension commutation order.
- Employer computation and Form 16/salary certificate.
- Gratuity and leave encashment statements.
- Bank credit proof.
Common mistakes to avoid
- Treating monthly pension as exempt.
- Using wrong commuted fraction.
- Not separating gratuity and pension exemptions.
- Ignoring TDS mismatch.
How to proceed
- Confirm the applicable financial year, assessment year, taxpayer type, state and portal status before acting.
- Reconcile portal data with books, AIS/Form 26AS, GST returns, contracts, invoices, bank statements and source documents.
- Prepare a written computation, checklist, filing note or response with assumptions clearly stated.
- Download acknowledgements, challans, workings and evidence after filing or submission.
FAQs
Can WorkIndex help with this?
Yes. Post the facts and documents; relevant experts can quote for filing, advisory, reconciliation, registration, appeal support or ongoing compliance.
Is this page final legal advice?
No. Use it to prepare. A professional should verify the active law year, notification, portal utility and records before filing or taking a tax position.
What should I mention while posting?
Mention the year, state, form, deadline, amount involved, documents available, portal status and whether you need filing, correction, advisory or representation.