Paragraph match score 80.3%
Page A-684
Is a Commuted Pension Taxable?
Pension received along with gratuity: One-third of the commuted pension is exempted from tax, while the remaining two-thirds will be taxed like salary when received.
Page A-738
Taxability of Commuted and Uncommuted Pension
If you do not work for a government body or corporation, you will be taxed as follows: If you receive gratuity along with your pension, the tax exemption is equal to one-third of the commuted pension. If you do not receive gratuity along with your pension, the tax exemption is equal to one-half of the commuted pension.