The Statutory Brief

IT Act 1961 → 2025 / Section 10(10A)

Salary

Section 10(10A) → Section 19 (Sl. 7–9)

Commuted pension exemption

Section 10(10A) of the old Income-tax Act, 1961 · new section 19 (Sl. 7–9) under the Income-tax Act, 2025

New reference Section 19(1), Table Sl. Nos. 7–9

Income-tax Act, 1961Section 10(10A)

  • 10(10A)(i): commuted pension of Government, local authority and statutory corporation employees — fully exempt
  • 10(10A)(ii): others — one-third of commuted value if gratuity also received, one-half otherwise
  • 10(10A)(iii): commuted pension from LIC pension fund (10(23AAB)) — fully exempt
  • Uncommuted (monthly) pension is taxable as salary

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 19(1), Table Sl. Nos. 7–9

  • Sl. No. 7: Government, all-India services, defence, State, local authority and statutory corporation employees — entire amount
  • Sl. No. 8: any other employer — commuted value of one-third of pension if gratuity received, otherwise one-half
  • Sl. No. 9: from a fund in Schedule VII Sl. No. 3 (insurer pension fund) — entire amount
  • Uncommuted pension remains salary (standard deduction applies)

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered from section 10(10A) into the section 19 table; conditions unchanged.

Practice notes

  • Available under both regimes.
  • Note on form: in the 2025 Act these are deductions in computing salary (section 19 table), not exemptions under section 10 — the effect is the same.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

Is commuted pension taxable under the new Income Tax Act?

Section 19 Table Sl. Nos. 7–9: fully exempt for Government employees; for others, one-third (if gratuity received) or one-half of the commuted value is exempt. Both regimes.

What is section 10(10A) called in the new Income-tax Act, 2025?

Section 10(10A) of the Income-tax Act, 1961 corresponds to Section 19 (Sl. 7–9) of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27). Detailed reference: Section 19(1), Table Sl. Nos. 7–9.

What changed in section 10(10A) under the new Income Tax Act?

Renumbered from section 10(10A) into the section 19 table; conditions unchanged.

Is section 10(10A) still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(10A) of the 1961 Act. Section 19 (Sl. 7–9) of the 2025 Act applies from tax year 2026-27.

Related sections

16→19Deductions from salary: standard deduction, professional tax (and gratuity exemption)10(10)→19Gratuity exemption — ₹20 lakh limit10(12A) / 10(12B)→Sch IITax-free NPS withdrawals: 60% lump sum and partial withdrawal