Family Pension- Gift [Sec. 92(2)(m)]
by Under Section 92(2)(m) of the Income-tax Act, 2025, specified receipts relating to family pension and gifts are chargeable under the head “Income from Other Sources”, subject to the applicable provisions. Family pension is generally an amount received by the legal heirs or family members of a deceased employee after the employee’s death and is taxable in the recipient’s hands, with the prescribed deduction available under the Act. Gifts, including specified sums of money or property received without or for inadequate consideration, may also become taxable where statutory conditions and thresholds are satisfied. However, prescribed relatives and specified circumstances may qualify for exemption.
1. Family Pension
Family pension means a regular amount received by the family members or legal heirs of a deceased employee after the employee’s death. It is generally taxable under the head “Income from Other Sources” because it is received by the family member and not by the employee who rendered the services. The recipient is entitled to a prescribed deduction from family pension while computing taxable income, subject to the conditions and limits specified under the Income-tax Act, 2025. The balance amount, after allowing the applicable deduction, is included in the recipient’s total income and taxed according to the applicable tax provisions.
2. Gift
A gift may consist of money, movable property or immovable property received by a person without consideration or for inadequate consideration. Under the Income-tax Act, 2025, specified gifts may be taxable under “Income from Other Sources” when the prescribed conditions and monetary thresholds are satisfied. The taxable amount depends upon whether the gift consists of money, movable property or immovable property and whether adequate consideration has been paid. However, gifts received from specified relatives or on prescribed occasions and circumstances, such as marriage, inheritance or under a will, may qualify for exemption. Thus, only specified taxable gifts are included in income.