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Income Tax on Pension

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A Government Servant serving in a government department or a Public Sector Undertaking like MTNL or BSNL on their permanent absorption to the PSU earns his/her pension after putting in a minimum of 20 years to 40 years of qualifing service while a Member of Legislative Assembly or a Member of Parliament becomes eligible for pension just after 1 to 5 years of being sworn in as MLA/MP, sometimes without actively attending the proceedings of the house. 

It is learnt through very reliable sources that no Income Tax is paid on his/her pension by a MLA/MP earned after just 1 to 5 years of only being sworn in i.e. pension to MLAs and MPs is fully exempted from Income Tax while full Income Tax is deducted at source on normal rates of 10% to 30% on the pension paid to other government servants after their retirement on attaining the age of superannuation at 60 years after putting in qualifying service of a minimum of 20 to 40 years.

You will kindly appreciate that pension paid to a government servant after his/her retirement on superannuation is not paid as renumeration for any work or service rendered by him/her but is paid as deferred wages earned by him/her during his/her active service. 

On one hand, MLAs and MPs are declared and treated as public servants and are paid from the same public exchequer and they are fully exempted from Income Tax on their pension ; on other hand other public servants are made to pay Income Tax on their pension at normal rates. This leads to great discrimination between two categories of public servants.

It is, therefore, prayed that great injustice done to public servants by way of discrimination between two categories of public servants be removed by way of abolishing Income Tax on pension for all the pensioners being paid from public exchequer. We shall be grateful for this act of ensuring equality of all pensioners before the law (Income Tax Act) as enshrined in the Constitution of India.

Thanking you,

Sincerely yours 

(S. R. Singh)

2318-N/3, Rajiv Nagar, Gurgaon-122001

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