Purpose:
This section provides a full tax exemption on pension received by government employees (or their families) who have been awarded gallantry awards by the Central/State Government.
Key Conditions for Exemption:
✅ Applicable to:
- Gallantry award winners(e.g., Param Vir Chakra, Maha Vir Chakra, Vir Chakra, etc.)
- Family pensionreceived by their dependents (if the awardee is deceased)
✅ No monetary limit – Entire pension is tax-free.
✅ Must be a government-recognized gallantry award.
Example 1: Pension for Param Vir Chakra Awardee
- Recipient:An army officer awarded the Param Vir Chakra (India’s highest military honor).
- Pension Received:₹50,000/month (special pension for bravery).
- Pension Amount:₹50,000/month (₹6,00,000/year)
- Taxable Income:₹0 (Fully exempt under Section 10(18))
Example 2: Family Pension for Shaurya Chakra Martyr’s Widow
- Recipient:Widow of a soldier awarded the Shaurya Chakra (posthumously).
- Family Pension Received:₹25,000/month.
- Pension Amount:₹25,000/month (₹3,00,000/year)
- Taxable Income:₹0 (Exempt under Section 10(18))
Example 3: Normal Government Pension (Not Exempt)
- Recipient:A retired IAS officer (no gallantry award).
- Pension Received:₹60,000/month.
- Pension Amount:₹60,000/month (₹7,20,000/year)
- Taxable Income:₹7,20,000 (Taxable under “Income from Salaries”)
(Since the pensioner does not hold a gallantry award, Section 10(18) does not apply.)
