How Does Commutation Calculated on Pension ? – A pensioner, if he so desires, can commute a maximum of 1/3 of basic pension at any time. However, in case the commutation is requested after one year of cessation of service, medical examination is compulsory.
Read – What is the Eligibility for Getting Pension?
The amount payable on commutation is
Commuted basic pension x 12 x Commutation value.
Commutation value for different age from 17 years to 85 years is given in Cir.226/95/BC and for ready reference the same for age group from 55 to 64 years is given below:
| Age on Next BDay | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 |
| Commutation Value | 11.73 | 11.42 | 11.10 | 10.78 | 10.46 | 10.13 | 9.81 | 9.48 | 9.15 | 8.82 |
After commutation, a pensioner will get
Total pension = Residual basic pension (basic pension minus commuted portion) + DA on basic pension before commutation.
Commuted portion of pension will be restored after 180 months from the date of commutation. Commutation date, amount etc will be informed to the pensioner in the pension sanction letter issued to him.
Read : How to Calculate Gratuity on Retirement?
Income Tax : Commutation amount is fully exempt from income tax. Pension is treated as salary for the purpose of Tax calculations. TDS on pension payment has to be made as applicable and Form 16 to be issued by the branches.Click Calculate Income Tax and generate Form 16
