1. The pension received by the wife after the husband’s demise is considered as family pension and should be reported under the head “Income from Other Sources” in the Income Tax Return (ITR) .
2. The wife can claim a standard deduction under section 57(iia) for family pension. For FY 2025-26 and onwards, this deduction is either one-third of the family pension received during the year or Rs 25,000, whichever is less. Earlier, the limit was Rs 15,000 .
3. The lump sum amount of Rs 48,000 received initially is likely to be considered as commuted pension. In case of government employees, commuted pension is generally fully exempt from tax. For non-government employees, partial exemption applies depending on gratuity received. Since this is EPFO pension, it may be treated similarly to government pension and exempt from tax, but exact treatment depends on specific facts .
4. The EPFO pension received by the wife may not show up in the AIS or TIS because these statements do not always contain all income details, especially if no TDS was deducted or if the income source is exempt or not reported by the payer. AIS is an informative statement but taxpayers must declare all taxable income regardless of AIS entries .
5. The wife can avail the standard deduction under section 16 on her own government pension (shown as salary income) and separately claim the deduction under section 57(iia) for the family pension received from her late husband’s EPFO pension. Both deductions can be claimed as they pertain to different income sources .
6. Regarding the Sovereign Gold Bonds (SGBs), capital gains from the bonds are tax-free if held till maturity (8 years). Since these bonds matured and were credited in FY 24-25, the capital gain of Rs 37,000 is exempt from tax .
After husband's demise the pension from EPFO being received by wife-- income tax calculation
A)The husband was receiving EPFO pension of Rs 2000 every month when alive. After his demise his wife is getting 50% of this pension which is Rs 1000 per month. 1.Will this pension( received by wife)be mentioned under family pension under "Income from other sources" in income tax return? 2.If this is family pension then will the wife get deduction under section 57(iia) for FY [deleted] which is Rs 25000 or one third of the family pension whichever is less? 3. Initially the wife had received an amount of Rs 48,000 as lump sum in her bank account as she went to claim for husband's pension after almost 4 years post his demise. After that lump sum payment she is continuously getting Rs 1000 each month. Is this lump sum amount of Rs 48000 credited in the start be considered commuted pension and if so what will be taxation on it? 4.The EPFO pension received by wife is not showing in her AIS and TIS on the income tax portal. If this income is taxable then why is it not mentioned in the AIS and TIS? 5. The wife( retired government teacher) is also a central government pensioner and also receives pension from there post retirement. This pension is shown in as her salary and standard deduction under section 16 is availed in it. So can she both avail deduction under section 57(iia) for family pension and standard deduction under section 16 for pension from central govt( as salary)? B) The 2.5% Sovereign Gold bond and 2.75% Sovereign Gold bond held since 2016 have automatically matured after 8 yrs and have been credited to the bank account in FY 24-25. There is a capital gain of Rs 37000 on them. Is this capital gain tax free?
Let me split your query into Part A (Family Pension) and Part B (Sovereign Gold Bonds) so it’s absolutely clear.
A) Family Pension from EPFO
1. Head of Income
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The widow’s pension received from EPFO (₹1,000/month) is not salary (since she is not an employee).
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It is treated as “Family Pension” → taxable under “Income from Other Sources.”
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So yes, in her ITR, it should be disclosed under “Other Sources → Family Pension.”
2. Deduction under Section 57(iia)
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Yes, family pension qualifies for a deduction u/s 57(iia):
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Lower of ₹15,000 (not ₹25,000) or 1/3rd of the pension amount.
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For FY 2023–24, the limit continues to be ₹15,000, not ₹25,000.
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So, if she receives ₹12,000 in the year (₹1,000 × 12), deduction = 1/3rd of ₹12,000 = ₹4,000. Taxable family pension = ₹8,000.
3. Lump Sum of ₹48,000
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This is arrears of unclaimed family pension (for 4 years) paid together.
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It is not commuted pension (commutation is only for the employee’s own pension, not for family pension under EPS).
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So, it is fully taxable as family pension in the year of receipt.
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She can claim Section 57(iia) deduction also against this arrear.
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Additionally, she may claim Section 89(1) relief (income tax relief on arrears) if it reduces tax liability.
4. Not appearing in AIS/TIS
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AIS/TIS data is based on reporting by deductors (banks, employers, mutual funds, etc.).
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EPFO may not have filed a TDS return for this pension (since pension amount is small and typically below taxable limit, no TDS deducted).
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That’s why it doesn’t show up.
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But non-reflection in AIS doesn’t make it exempt. Taxpayer still needs to disclose it.
5. Dual Deduction Issue
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Yes, she can claim both:
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Standard Deduction u/s 16(ia) on her own government pension (taxable as “Salary”).
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Deduction u/s 57(iia) on family pension from EPFO (taxable as “Other Sources”).
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These two are independent provisions and not mutually exclusive.
B) Sovereign Gold Bonds (SGBs)
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On redemption/maturity after 8 years:
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Capital gains on redemption of SGBs are exempt u/s 47(viic) read with CBDT notification.
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So, the ₹37,000 gain on maturity is completely tax free.
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However, the annual interest (2.5% / 2.75%) is taxable under “Income from Other Sources” in the year of receipt.
Thanks
Damini
Thanks for the reply. I have another query as mentioned below: For NTPC bonds, 40 % redemption on face value which is around Rs 1300 has been credited to the bank account. Is this amount tax free?
The 40% redemption amount received on NTPC bonds is not tax free; it is treated as interest income and taxable under “Income from Other Sources” at your applicable income tax slab rate.
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You mentioned 40% redemption on face value, ~₹1,300 credited.
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This sounds like: face value ₹1,000, and 40% of it = ₹400 per bond redeemed (so, if you held 3–4 bonds, you’d get ~₹1,300).
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Since this is redemption of face value, it is return of principal → not taxable.
Important: If you bought these bonds originally at issue (face value), the redemption is entirely tax-free.
If you bought them later in the secondary market at a price different from face value, then you need to check whether there is a capital gain/loss component on redemption.
The ₹1,300 credited towards 40% redemption of NTPC bonds’ face value is tax-free (assuming you bought at face value). No need to show it as income in ITR; just keep the credit statement as supporting evidence.
Thanks
Damini