Pension commutation tax calculator
Enter your lump sum, the share commuted and your monthly pension. See what's tax-free and your tax this year.
- Government and private
- With or without gratuity
- Free, no sign-up
Retirement benefits, all claimed
Gratuity, leave encashment and pension each have their own exemptions. Our experts make sure you get them all.
Questions people often ask
Is NPS pension taxable?
The annuity you receive each month is taxable as income.
What is section 89 relief?
If you receive pension arrears for earlier years, relief can stop them pushing you into a higher slab.
How pension is taxed
Lump sum and monthly, separately.
- Lump sum: tax-free for government staff; one-third or half for others.
- The rest is taxed as salary.
- Monthly pension: salary, with the standard deduction.
Last reviewed 9 October 2026. The rules in this calculator come from these official sources.
- Taxability of retirement benefits Income Tax Department
Common questions
Is commuted pension tax-free?
Fully, for government employees. For others, one-third of the full commuted value is tax-free if you also got gratuity, half if you didn't.
What is the full commuted value?
What you'd get if you commuted 100% of your pension: lump sum ÷ share commuted.
How is monthly pension taxed?
As salary, so you get the standard deduction (₹75,000 in the new regime).
Example: ₹15 lakh for 40%, private employer, with gratuity
Full value ₹37.5 lakh; one-third, ₹12.5 lakh, is tax-free; ₹2.5 lakh is taxable.
Is pension from LIC taxable?
Yes. Annuity payments from an insurer are taxed as income.
