Q. What is the Tax implication on surrender of Pension Plans?

A. (1). If assesse had earlier claimed deduction under section 80CCC at the time of
contributing to certain pension schemes then the following amounts are considered taxable:

(a) on account of the surrender of the annuity plan whether in whole or in part, in any
previous year, or
(b) as pension received from the annuity plan.
an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be
deemed to be the income of the assessee or his nominee, as the case may be, in that previous
year in which such withdrawal is made or, as the case may be, pension is received, and shall
accordingly be chargeable to tax as income of that previous year.
Surrender Value from HDFC Pension Plan 4,40,000
Surrender Value from ICICI Pension Plan 3,13,000
Taxable Income 7,53,000

(2). If Assessee had earlier not claimed deduction under section 80CCC then his taxable
income is only the gain portion on surrender Value, as per section 57(iii), the contributions he
made earlier will be available for deduction from Total surrender value received.

HDFC PP ICICI PP Total

Surrender Value from HDFC Pension Plan 4,40,000 3,13,000 7,13,000
Contributions made earlier (3,00,000) (2,00,000) (5,00,000)
Taxable Income 1,40,000 1,13,000 2,13,000