Home |Tax returns filing | My uncle used to work for the United Nations (UN). However, he retired 4 years ago and now lives in India. Now that he lives permanently in India, will his pension also be tax free or will it taxable? Specify under what section of the income-tax Act this would be so?

My uncle used to work for the United Nations (UN). However, he retired 4 years ago and now lives in India. Now that he lives permanently in India, will his pension also be tax free or will it taxable? Specify under what section of the income-tax Act this would be so?

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Shristi Shristi
Answered on February 12,2020

Pension received from the UN by its employees is exempt from tax. However, this exemption has not been specifically mentioned in the income-tax Act. Under the United Nations Privileges and Immunities Act, 1947, any salary or emoluments received by officials of UN are exempt from tax. These provisions have been brought into force in India and nothing to the contrary has been mentioned in the income-tax Act.

In the case of CIT v. K. Ramaiah [1980] 126 ITR 638 the Karnataka High Court held that since salary has been defined to include pension (as per section 17 of the income-tax Act), if salary is exempt from tax, pension will also be exempt. Therefore, salary or pension received by employees of the UN or any person covered under the UN (Privileges and Immunities), Act, 1947 will also be exempt from income tax. Your uncle can enjoy tax free pension in India.

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