Pensions can either be taxed under the heading of Salaries or income from other sources, depending on the source of the pension. Any pension which arises or accrues as a result of your employment becomes taxable as salary in your hands.
So the pension received from the Superannuation Fund (managed by LIC) as per the terms of your employment, as well as the pension received from EPFO under the Employees Pension Scheme 1995, will become taxable as salary, and you will be entitled to claim standard deduction against these two pensions received.
Understanding tax treatment of various pension receipts for retirees
The standard deduction amount would vary depending on whether you opt for the old or new tax regime. If you opt for the old tax regime, the standard deduction amount available would be restricted to an aggregate pension received subject to a maximum of ₹50,000/-. If you opt for the new tax regime, a higher amount of Rs. 75,000/- is available as a standard deduction.
Any pension received by you in respect of any pension product bought by you directly gets taxed under the head “Income from other Sources”. Please note that no deduction like the standard deduction explained above is available against such pension received.
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Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant his X handle.
