The Commutation of Pension under the Haryana Civil Services (Pension) Rules, 2016 allows a retiring government employee to receive a portion of his or her pension as a lump-sum payment instead of monthly pension. This helps employees meet post-retirement financial needs such as home construction, loans, or family responsibilities. Rules 74 to 83 clearly define eligibility, percentage, procedure, and restoration of commuted pension.
1️⃣ What Is Commutation of Pension?
Commutation means converting a part of the monthly pension into a one-time lump-sum payment. It does not affect the remaining portion of pension, which continues to be paid monthly.
For example, if an employee chooses to commute 40% of his pension, he receives that portion as a lump sum immediately after retirement, while 60% continues as monthly pension.
2️⃣ Eligibility (Rule 74)
- ✅ Every government employee who retires under superannuation, voluntary, or invalid pension is eligible to commute a portion of pension.
- ✅ No commutation is allowed for compulsory retirement pension imposed as a penalty unless permitted by the Government.
- ✅ Pensioners drawing provisional pension cannot commute until final authorisation of pension.
3️⃣ How Much Pension Can Be Commuted (Rule 75)
- An employee can commute up to 40% of his/her basic pension.
- The commuted portion is paid as a lump sum calculated using the Commutation Value Table based on age next birthday.
- The remaining 60% of pension continues as a monthly pension.
Example: If pension = ₹40,000 per month, and the employee opts to commute 40%, then: → ₹16,000 is commuted (lump sum paid) → ₹24,000 continues monthly.
4️⃣ When to Apply (Rule 76)
Applications for commutation must be made as per the following timelines:
| Category of Pensioner | When to Apply |
|---|---|
| Retiring on superannuation | Along with pension papers (Form 1A) |
| Voluntary retirement | Before the date of retirement |
| Invalid pension | After sanction of pension, with medical examination |
| Already retired (not applied earlier) | Within 1 year from date of retirement without medical exam |
Note: If application is made after 1 year of retirement, the pensioner must undergo a medical examination by an approved Medical Board (Rule 79).
5️⃣ Calculation of Commuted Value (Rule 77)
The commuted value of pension is calculated using the formula:
Commuted Value = Portion of Pension × 12 × Commutation Factor
where the Commutation Factor depends on the age next birthday of the pensioner (as per Government of India commutation table adopted by Haryana).
Example:
Employee aged 61 years next birthday, pension ₹40,000, opts to commute 40% = ₹16,000.
Commutation factor (age 61) = 8.194 (as per 7th CPC).
₹16,000 × 12 × 8.194 = ₹15,73,000
Lump-sum payable: ₹15,73,000 (subject to applicable limits).
6️⃣ Medical Examination Requirements (Rule 79)
- Medical examination is not required for employees applying within 1 year of retirement.
- Compulsory for:
- Those applying after 1 year of retirement.
- Invalid pensioners.
- Re-employed pensioners applying after separation.
- The medical board certifies the pensioner’s health and age for determining commutation value.
7️⃣ Restoration of Commuted Portion (Rule 82)
The commuted portion of pension is restored after 15 years from the date of commutation.
- After 15 years, full pension (including the commuted part) is automatically restored.
- No separate application is required; the Treasury restores it based on PPO details.
Example: If pension was commuted on 1 Jan 2025, the commuted portion is restored from 1 Jan 2040.
8️⃣ Nomination & Payment (Rule 80–81)
- Payment of commutation is made through Treasury/Bank after PPO authorisation by Accountant General (A&E), Haryana.
- If the pensioner dies before receiving the lump sum, it is paid to the nominee or legal heirs.
- If the pensioner dies after receiving commutation, no recovery is made from family pension.
9️⃣ Tax & Deductions
- Commuted pension received in lump sum is fully exempt from income tax for government employees under Section 10(10A)(i) of the Income Tax Act.
- No deductions are made except for recoveries due to Government (if any).
10️⃣ Documents Required for Commutation
- ✅ Form 1A – Application for Commutation of Pension
- ✅ Pension Payment Order (PPO)
- ✅ Medical Certificate (if required)
- ✅ Identity proof and bank details
- ✅ Two passport-size photographs
- ✅ Specimen signature/thumb impression
11️⃣ Quick Reference Table – Commutation of Pension (Rules 74–83)
| Rule No. | Provision | Summary |
|---|---|---|
| 74 | Eligibility | All regular pensioners except compulsory retirees. |
| 75 | Maximum Limit | Up to 40% of basic pension. |
| 76 | When to Apply | Within 1 year of retirement (no medical test). |
| 77 | Calculation | Pension × 12 × Commutation Factor (based on age). |
| 79 | Medical Exam | Required if applying after 1 year or for invalid pension. |
| 80–81 | Payment & Nomination | Through Treasury; payable to nominee if pensioner dies before payment. |
| 82 | Restoration | After 15 years from date of commutation. |
FAQs – Commutation of Pension in Haryana
1. What is the maximum pension I can commute?
Up to 40% of your basic pension as per Rule 75.
2. When is the commuted portion restored?
After 15 years from the date of commutation (Rule 82).
3. Is commuted pension taxable?
No. It is fully exempt under Section 10(10A)(i) of the Income Tax Act for government employees.
4. Do I need a medical exam?
Only if you apply for commutation after 1 year of retirement or for invalid pension cases.
5. Who approves and pays commuted pension?
The Accountant General (A&E), Haryana authorises it; payment is made by Treasury/Bank.
6. Can I cancel or change my commutation after receiving payment?
No. Once the lump-sum is disbursed, commutation cannot be altered or cancelled.
7. Will my family pension be affected?
No. Commutation affects only the employee’s own pension, not the family pension.
Conclusion
Under Rules 74 to 83 of the Haryana Civil Services (Pension) Rules, 2016, pensioners can receive up to 40% of their pension as a lump sum through commutation. This facility helps employees manage large post-retirement financial needs, while the remaining pension continues monthly. The process is transparent, tax-free, and ensures restoration after 15 years. Employees should apply within one year of retirement to avoid a medical examination and ensure timely payment.
Source: Official Haryana Civil Services (Pension) Rules, 2016 – Finance Department, Government of Haryana.