My Grandfather was in judicial services as district judge, who expired in 2007. My grandmother is now receiving family pension. Last month my grandmother received arrears of pension during the period when my grandfather was alive. Here I would like to emphasise that it is not the arrear of family pension which my grandmother is getting. I Would like to know whether it will be treated as capital receipts in the hand of my grandmother or will it be taxable in the hand of my grandmother or she has to file return of my grandfather as his legal representative. Vinay Agarwal, Gwalior
The pension is regarded as salary.The salary is taxable on the basis of due or receipt which ever happened earlier.Pension received in arrears by your grand mother actually became due to your grandfather when he was alive.Had he been alive, he would have paid tax on the arrears.
The pension is regarded as salary.The salary is taxable on the basis of due or receipt which ever happened earlier.Pension received in arrears by your grand mother actually became due to your grandfather when he was alive.Had he been alive, he would have paid tax on the arrears.
Section 159 of the I T Act starts with
159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
In the instant case, although the pension became due when your grand father was alive , it was only received after his demise by your grand mother. Therefore , it is taxable in hand of your grand mother who shall be treated as”Legal Representative” u/s 159 of the I t Act. in th year of receipt of arrears.
She will have to file the return if the gross total income of your grand father exceeds exemption in the year in which it has been received. Please remember, relief u/s 89 should be claimed , if it ios beneficial to your case.
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