Circular No. 623

What it does

Holds that Judges of the Supreme Court and the High Courts get the section 10(10A)(i) exemption on the commuted portion of their pension. Section 10(10A)(i) leaves out of total income any payment in commutation of pension received under, among others, the Civil Pension (Commutation) Rules of the Central Government. The Board is advised that section 19 of the High Court Judges (Conditions of Service) Act, 1954 and the corresponding provision of the Supreme Court Judges (Conditions of Service) Act, 1958 apply those Rules, with necessary modifications, to Judges, and that Judges are governed by rule 3, which allows commutation of a lump sum portion not exceeding one-half of the pension. The commutation therefore being under those Rules, the exemption follows.

Why it was issued

The applicability of section 10(10A)(i) to commutation of pension by Judges was raised before the Board and it took advice on the point.

Who it reaches

Retired Judges of the Supreme Court and the High Courts
The offices paying and deducting tax on judicial pensions
Assessing Officers assessing commuted pension

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.10	s.11, s.19
s.19	no counterpart recorded

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

71. Commutation of pension received by Judges of the Supreme Court and High Courts
1. Under section 10(10A )(i) of the Income-tax Act, 1961 any payment in commutation of pension received, inter alia, under the Civil Pension (Commutation) Rules of the Central Government, shall not be included while computing the total income of the recipient.
2. The issue regarding the applicability of section 10(10A)(i) to the computation of pension received by Judges of the Supreme Court and the High Courts has been considered by the Board. The Board have been advised that under section 19 of the High Court Judges (Conditions of Services) Act, 1954 and the corresponding provisions in the Supreme Court Judges (Conditions of Service) Act, 1958, the Civil Pension (Commutation) Rules for the time being in force shall, with necessary modifications, apply to Judges. The Board are further advised that the Judges would be governed by Rule 3 of the Civil Pension (Commutation) Rules, which provide for commutation for a lump sum portion not exceeding one-half of the pension. Since the commutation is under the aforesaid Rules, Judges of the Supreme Court and High Courts will be entitled to the exemption of the commuted portion under section 10 (10A)(i) of the Act.
Circular : No. 623, dated 6-1-1992.

What to watch

The exemption fastens on the commuted portion; the pension actually drawn month by month is unaffected.
The reasoning rests on the Judges being governed by the Civil Pension (Commutation) Rules through the two Conditions of Service Acts, and on rule 3 permitting commutation of up to one-half of the pension.
The conditions of service statutes and the commutation rules the circular reads together have been amended over the years, so check the rule as it stood when the commutation was received.

Where you meet it

In the return or the assessment of a retired Judge where commuted pension has been brought to tax, and in the deduction made by the disbursing office.

What it names

Rules it names. Rule 3 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 116/2026 [F. No.195/13/2025-ITA-I] / SO 4706(E) : Notification in the case of Maharashtra Electricity Regulatory Commission — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 25 August 2026
Notification No. 112/2026 [F. No. 300196/6/2026-ITA-I] / SO 4458(E) : Notification in the case of District Legal Service Authority, Panchkula — Ministry of Finance 11 August 2026
Notification No. 109/2026 [F. No. 300196/39/2025-ITA-I] / SO 4321(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Odisha Joint Entrance Examination Committee — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 107/2026 [F. No. 300196/65/2018-ITA-I] / SO 4319(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 106/2026 [F. No. 300196/65/2018-ITA-I] / SO 4318(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 104/2026 [F.No.300196/1/2026-ITA-I] / SO 4308(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of District Legal Service Authority, Charkhi Dadri — Ministry of Finance 3 August 2026

← Circular No. 622 · Circular No. 621 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is