The Central Board of Direct Taxes on Thursday clarified that pensions from former employers are taxable under the salaries head.

The board said the Finance Act, 2018, has amended Section 16 of the Income Tax Act, 1961, and according to this, taxpayers with income chargeable under the “salaries” head are entitled to claim the standard deduction of Rs 40,000.

Standard deduction allows for a flat deduction from a salary income, to make up for expenses an employee may incur during his employment. The CBDT said it was issuing a clarification after getting representations about whether a taxpayer, who receives pension from his former employer, is also be eligible to claim this deduction.

“Any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000, or the amount of pension, whichever is less, under Section 16 of the Act,” CBDT said on Thursday.

Finance Minister Arun Jaitley introduced the standard deduction during the 2018 Budget, The Times of India reported.