Tax on Family Pension in India — Section 57 Deduction Guide 2026-27

Updated: 3 June 2026 | Section 57(iia) | Income from Other Sources | TY 2026-27

Family pension received by a widow or legal heir is taxable under "Income from Other Sources" — not under the Salaries head. A deduction of ₹15,000 or 1/3rd of family pension received, whichever is lower, is allowed under Section 57(iia). Crucially, this deduction is available even under the new tax regime — one of very few deductions that survive in the new regime.

₹15,000

Max Section 57(iia) deduction — or 1/3rd of family pension, whichever is LOWER
Example: ₹3,00,000 family pension → 1/3rd = ₹1,00,000 → deduction = min(₹15K, ₹1L) = ₹15,000

NEW
REGIME

Section 57(iia) deduction IS available under the new tax regime
Unlike 80C, HRA, 80D — the ₹15,000 family pension deduction works in both old and new regimes.

⚠

Family pension is NOT salary. The retiree's own pension (received while alive) is taxed under "Salaries". Family pension received by the widow/heir after the pensioner's death is always "Income from Other Sources" regardless of employer type. These are taxed differently and carry different deductions.

Pension Types — Tax Treatment Comparison

Type	Tax Head	Section	Deduction Allowed	New Regime?
Retiree's own pension (received while alive)	Salaries	Section 15–17	Standard deduction ₹75,000	Yes (₹75K std dedn)
Family pension (widow / legal heir)	Income from Other Sources	Section 56(2)	₹15,000 or 1/3rd (lower) u/s 57(iia)	Yes (Section 57 dedn)
Commuted pension (lump sum at retirement)	Salaries	Section 10(10A)	Fully exempt (govt); partial for others	Yes (10(10A) exemption)
NPS annuity (post-60 annuity payments)	Salaries / Other Sources	Section 10(12A) / 56	60% lump sum exempt; annuity taxable	Yes (lump sum exempt)

Calculating Taxable Family Pension — Step-by-Step

EXAMPLE 1

Family Pension ₹3,00,000 per year

Gross family pension: ₹3,00,000 | 1/3rd of ₹3,00,000 = ₹1,00,000 | ₹15,000 cap applies (lower of ₹15K and ₹1L) | Taxable family pension = ₹3,00,000 − ₹15,000 = ₹2,85,000

EXAMPLE 2

Family Pension ₹36,000 per year (₹3,000/month)

Gross family pension: ₹36,000 | 1/3rd of ₹36,000 = ₹12,000 | ₹12,000 is lower than ₹15,000 | Deduction = ₹12,000 | Taxable family pension = ₹36,000 − ₹12,000 = ₹24,000

TAKEAWAY

When Does the 1/3rd Rule Apply?

The 1/3rd deduction is lower than ₹15,000 only when annual family pension is below ₹45,000 (i.e., ₹3,750/month). For most family pensioners receiving above ₹45,000/year, the deduction will always be capped at ₹15,000.

Reporting Family Pension in ITR

In ITR-1 (Sahaj), family pension is reported under "Income from Other Sources" — enter the gross amount received. The Section 57(iia) deduction is entered in the deduction field within the same schedule. In ITR-2, use Schedule OS (Other Sources) and claim the deduction in the deductions row. Do not report family pension under "Salaries" — this is a common error that can cause notices.

Key reminder: TDS may have been deducted on your family pension by the paying bank or institution. Always cross-check your Form 26AS or AIS before filing. If excess TDS was deducted (because the payer did not account for Section 57(iia) deduction), claim the excess as a refund in your ITR.

Frequently Asked Questions

Which ITR form should I use if I receive only family pension?

Family pension is taxable under "Income from Other Sources", not under Salaries. If your only income is family pension (along with possibly interest income and one house property), you can use ITR-1 (Sahaj). ITR-1 has a field for "Income from Other Sources" where family pension is reported. You cannot use ITR-1 if you have capital gains, foreign assets, or income from business/profession. In those cases, ITR-2 is appropriate. The Section 57(iia) deduction of ₹15,000 (or 1/3rd whichever is lower) is claimed in the deductions row under "Other Sources".

Does TDS get deducted on family pension?

Yes, in many cases. When family pension is paid by a PSU, government department, or bank (via pension account), TDS may be deducted under Section 194 (dividend) or more commonly under Section 194A if treated like interest, or under general provisions. However, the correct treatment is that TDS on family pension is deducted under Section 194 at 10% when the annual family pension exceeds the basic exemption threshold. Some paying entities treat family pension like salary (deducting under Section 192) incorrectly. Always check Form 26AS or AIS to see what TDS has been deducted, and claim the Section 57(iia) deduction while filing ITR.

Is family pension from a government employer taxed differently?

No. Family pension from both government and private sector employers follows the same tax rules — it is taxable under "Income from Other Sources" and the Section 57(iia) deduction (lower of ₹15,000 or 1/3rd of family pension) applies in both cases. The distinction that matters is between family pension and the retiree's own pension: the retiree's pension (which they earned while alive) is taxed under "Salaries" when received by the pensioner, but family pension received by the widow or legal heir after the pensioner's death is always "Income from Other Sources" regardless of whether the deceased was a government or private sector employee.

Is the Section 57 family pension deduction available in the new tax regime?

Yes — this is one of the few deductions explicitly allowed under the new tax regime. Section 57(iia) deduction on family pension (₹15,000 or 1/3rd of family pension, whichever is lower) is available even if you opt for the new tax regime under Section 115BAC. The new regime disallows most deductions under Chapter VI-A (80C, 80D, HRA, etc.) but Section 57(iia) is retained as it is a deduction under "Income from Other Sources" and not a Chapter VI-A deduction. This makes family pension one of the better-treated income types under the new regime.

Is NPS family pension (received by nominee) taxable?

Under the National Pension System (NPS), when a subscriber dies during the accumulation phase, the nominee receives the accumulated corpus as a lump sum. This lump sum received by the nominee from NPS is exempt from tax under Section 10(12A) — the same exemption that applies to the subscriber's own lump sum withdrawal. However, if the nominee uses the corpus to purchase an annuity, the annuity income received periodically is taxable as "Income from Other Sources" in the nominee's hands. The family pension received from the employer (if the deceased was also entitled to pension) would follow the regular Section 57(iia) rules.

Income from Other Sources Old vs New Tax Regime Income Tax Slabs 2026-27 Standard Deduction for Salary Form 26AS / AIS ITR Filing Due Date

Filing ITR for Family Pension Income?

Our tax experts ensure correct reporting of family pension, TDS reconciliation, and maximum refund for senior citizen pensioners.

File ITR with Expert Help →

◆ Available in 71 Cities

Family Pension Tax Near You

Expert CA/CS assistance for family pension tax across India. Click your city for local details.

→ New Delhi → Mumbai → Bengaluru (Bangalore) → Hyderabad → Chennai → Kolkata → Pune → Ahmedabad → Noida (UP) → Gurgaon (Gurugram) → Jaipur → Lucknow → Chandigarh → Surat → Kochi (Cochin) → Faridabad → Ghaziabad → Greater Noida → Panipat → Sonipat → Manesar (IMT) → Dharuhera → Mathura → Palwal → Agra → Kosi Kalan → Aligarh → Khair → Jewar (Noida International Airport) → Kanpur → Varanasi (Kashi) → Prayagraj (Allahabad) → Meerut → Bareilly → Moradabad → Gorakhpur → Firozabad → Saharanpur → Muzaffarnagar → Bulandshahr → Hapur → Karnal → Kurukshetra → Ambala → Hisar → Rohtak → Yamunanagar → Rewari → Bhiwani → Jodhpur → Udaipur → Kota → Ajmer → Bikaner → Ludhiana → Amritsar → Jalandhar → Patiala → Mohali (SAS Nagar) → Bathinda → Dehradun → Haridwar → Rudrapur → Shimla → Solan (Baddi-Barotiwala-Nalagarh) → Bhopal → Indore → Gwalior → Jammu → Srinagar → Panchkula

Ask Veda