Classify the pension before choosing the deduction
For tax year 2026-27, section 93(1)(d) covers a regular monthly amount payable by an employer to an employee’s family member after the employee’s death. It falls within the Other sources computation addressed by that section. The deduction is the lower of one-third of that income and ₹25,000 where tax is computed under section 202(1), or ₹15,000 in other cases. It is not automatically the salary standard deduction of ₹75,000.
Use the current Act and the actual payment category
The Income-tax Act, 2025, as amended by Finance Act 2026 applies from 1 April 2026. The relevant current reference is section 93(1)(d), while FY 2025-26/AY 2026-27 uses the corresponding 1961 Act provisions, including legacy section 57(iia). Do not confuse a return filed during 2026 for the preceding financial year with income of tax year 2026-27. Sources were checked on 22 October 2026.
A recipient’s own pension from a former employer has a different employment connection from family pension received because another employee died. Likewise, an annuity paid by an insurer, a commuted pension, a death gratuity and a payment from a particular pension fund must be classified from their terms. Section 93 contains separate provisions for specified receipts, and other exclusions can apply to particular beneficiaries. The numerical cases below assume ordinary taxable family pension with no separate exemption.
Apply the one-third test before the rupee cap
The ₹25,000 amount is a ceiling, not an automatic deduction. If eligible income is ₹60,000, one-third is ₹20,000 and the section 202(1) deduction is ₹20,000. The ₹25,000 ceiling is reached when eligible income is ₹75,000. For the ₹15,000 ceiling, the corresponding income level is ₹45,000. These are deduction crossover points, not basic exemption limits or income levels at which tax necessarily starts.
Use the recipient’s eligible annual income and reconcile it to sanction orders and payment statements. The statutory cap is not expressed as a separate allowance for each paying office or bank account. Two qualifying streams received by the same taxpayer do not automatically create two ₹25,000 deductions. Conversely, separately taxable recipients require their own computations based on legal entitlement; a family’s aggregate bank receipts do not identify the correct taxpayer.
Part-year income and salary can coexist
For a part-year case, determine income properly includible for that tax year and apply the lower-of formula to it. Do not annualise a six-month payment merely to increase the deduction. The provision does not prescribe a monthly pro-rata reduction of the fixed ceiling merely because ordinary pension started during the year; the one-third limit and actual eligible income still control the result. Arrears, the applicable recognition basis and any relief under section 157 need separate consideration.
A person can have their own salary and a family pension in the same year. Section 19 addresses the Salaries computation and section 93 addresses the qualifying family pension. A valid salary deduction does not convert family pension into salary, and the family-pension deduction does not eliminate an otherwise available salary deduction. Apply the full requirements of each provision, rather than deducting the larger salary allowance from the combined receipt.
Prepare a gross-income-to-return bridge
Reconcile income, actual bank receipts, recoveries and any tax-credit records. A pension-related debit or deduction from payment is not automatically a deductible expense. Verify whether an amount is taxable at all before applying the ordinary deduction, and keep income exclusions separate from deductions in the computation. Do not select an ITR form solely because family pension exists; other income, residential status and the current form’s eligibility conditions matter.
The examples compare income after these stated deductions. They do not decide which regime is best or compute final tax, rebate, surcharge, cess, filing eligibility or advance-tax liability. Those decisions require the taxpayer’s full income and available reliefs. Retain a computation note recording the income category, period, regime and formula so that a prior-year salary template cannot silently determine the result.
Worked illustrations
The following cases use fictional figures and stated assumptions. Amounts are Indian rupees unless a different unit is expressly shown. They illustrate preparation controls and do not represent real client results.
Illustrative example 1: one-third is below the section 202 ceiling
Assume eligible family-pension income ₹60,000 for tax year 2026-27, with tax computed under section 202(1). One-third is ₹20,000, below ₹25,000. Deduction is ₹20,000 and the resulting family-pension income is ₹40,000. Claiming the full ₹25,000 would overstate the deduction by ₹5,000.
Illustrative example 2: the higher ceiling is reached exactly
Eligible annual family pension is ₹75,000 under section 202(1). One-third is ₹25,000, exactly the applicable cap. Deduction is ₹25,000 and the remaining amount is ₹50,000. This ₹75,000 crossover is not a universal tax-free income threshold.
Illustrative example 3: compare the two deduction caps
Eligible family pension is ₹3,60,000. One-third is ₹1,20,000. Under section 202(1), deduction is ₹25,000 and the remaining amount ₹3,35,000. In the stated other-regime case, deduction is ₹15,000 and the amount is ₹3,45,000. The ₹10,000 difference is in taxable-income computation, not automatically the tax saving.
Illustrative example 4: pension begins during the year
Assume only six monthly payments of ₹18,000 are properly includible in the tax year, with no arrears or other receipt complications. Eligible income is ₹1,08,000 and one-third ₹36,000. Under section 202(1), deduction is ₹25,000 and remaining income ₹83,000. Do not annualise income to ₹2,16,000 or reduce the ₹25,000 cap to ₹12,500 solely because six payments occurred.
Illustrative example 5: two paying sources do not duplicate the cap
One taxpayer has two qualifying family-pension streams, ₹2,40,000 and ₹1,20,000, with no separate exemption. Total eligible income is ₹3,60,000. Under section 202(1), the deduction is min(₹1,20,000, ₹25,000) = ₹25,000, leaving ₹3,35,000. Claiming ₹25,000 against each stream would overstate the deduction by ₹25,000.
Illustrative example 6: own salary and family pension use different provisions
Assume gross salary ₹6,00,000 and separate qualifying family pension ₹1,80,000, tax under section 202(1), no other salary adjustments and no special pension exemption. Section 19’s standard deduction is ₹75,000, leaving salary ₹5,25,000. Section 93 deduction is min(₹60,000, ₹25,000) = ₹25,000, leaving family pension ₹1,55,000. Combined income from these two computations is ₹6,80,000 before other applicable provisions. Do not deduct ₹75,000 from family pension itself.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify the beneficiary and legal entitlement. | Pension sanction and beneficiary records. |
| 2 | Distinguish own pension, family pension and other receipts. | Employer connection and payment terms. |
| 3 | Confirm the income period and applicable Act. | FY/AY or tax-year note. |
| 4 | Check any specific exclusion or separate treatment first. | Relevant benefit and statutory conditions. |
| 5 | Reconcile eligible gross income to payment statements. | Annual receipt and adjustment bridge. |
| 6 | Confirm the applicable regime. | Full computation and regime eligibility. |
| 7 | Compute one-third before applying the cap. | Section 93 lower-of calculation. |
| 8 | Aggregate eligible sources for the same recipient. | Source-wise schedule and single-cap check. |
| 9 | Compute own salary deductions separately if relevant. | Independent section 19 working. |
| 10 | Reconcile return classification, credits and relief. | Final income schedules and supporting documents. |
Sixteen practitioner FAQs
1. Is family pension treated as the recipient’s salary automatically?
No. Section 93 addresses the stated family-pension income under Other sources.
2. What is family pension for this provision?
A regular monthly employer payment to a family member after the employee’s death, as defined in section 93(1)(d).
3. Is the ₹25,000 amount always deductible?
No. Deduct the lower of one-third of eligible income and the applicable ceiling.
4. Which case uses ₹25,000?
The section specifies that ceiling where income-tax is computed under section 202(1).
5. What ceiling applies in other cases?
Section 93(1)(d)(ii) specifies ₹15,000, subject to the one-third limit.
6. Is ₹75,000 the family-pension exemption limit?
No. It is the income level at which one-third reaches the ₹25,000 deduction cap.
7. Does a six-month start automatically halve the cap?
The provision does not state such monthly proration. Apply the formula to the properly includible income.
8. Can each pension-paying office give a separate annual cap?
The statutory cap is not per paying office; reconcile all eligible sources for the taxpayer.
9. Can the recipient also claim a valid own-salary deduction?
Yes, where section 19 applies to their salary. Compute that head separately.
10. Is the recipient’s own employer pension the same category?
No. Establish the employment and payment relationship before assigning the income head.
11. Are insurer annuities automatically family pension?
No. Read the contract and applicable provisions; the payer and nature of the right matter.
12. Are all death-related receipts included in these examples?
No. Gratuity, commutation and specified benefits can require separate statutory treatment.
13. Are arrears resolved by multiplying the monthly payment?
No. Examine the actual period, inclusion basis and any applicable section 157 relief.
14. Does a net bank credit prove taxable gross pension?
No. Reconcile gross entitlement, adjustments and actual receipts using source records.
15. Does the larger deduction prove the regime is preferable?
No. Compare the complete tax computation, including other income and available reliefs.
16. Can an older AY template be reused without changes?
Only after verifying the applicable Act, regime, classification and formula for the actual period.
Organising the supporting working
Keep the underlying records, calculation and conclusion linked to the same entity and period. When organising work with assureTax and the assureOffice tools, retain these supporting schedules alongside the final output and use only the features confirmed for the version available to you.
Conclusion
Record the pension category before selecting the deduction. A recipient-wise income schedule and a separate salary working prevent the most common errors: applying ₹75,000 to family pension, duplicating the cap or confusing an AY return with the current tax year.