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Pension arrears

Pension arrears are the lump sum payable when a pension is revised, sanctioned late, or corrected. They qualify for Section 157 tax relief through Form No. 39.

Updated 28 September 2026

Pension arrears are the lump sum that becomes payable to a central government pensioner when a pension for a past period was underpaid or not paid, and is later made good. They arise whenever the pension actually drawn falls short of the pension due, for a stretch of months, and the shortfall is then paid in one payment: most often when a pension is revised at a pay commission with effect from an earlier date, when dearness relief is revised with retrospective effect, when a pension is sanctioned after the retirement date, or when an under-fixed pension is corrected. The arrears are simply the difference between what should have been paid and what was paid, accumulated over the intervening period.

Arrears are a routine feature of the pension system rather than an exception, because the pension changes more often than it can be implemented on the day the change takes effect. A pay-commission revision is effective from a date years before the revised orders issue; a dearness-relief revision is effective from 1 January or 1 July but is notified months later; and a correction of a fixation reaches back to when the error began. In each case the pensioner is owed the shortfall for the past period, and that shortfall is the arrears.

Most of the operating detail sits in one document, the “Scheme for Payment of Pensions to Central Government Civil Pensioners through Authorised Banks”, Sixth Edition, 2026, issued by the Central Pension Accounting Office. Paragraph 11(E) governs the revision of a pension and the payment of arrears on it, paragraph 11(H) the compensation for a late credit, paragraph 24 the payment of arrears in six named situations, and paragraph 25 the arrears of a pensioner who has died.

Where pension arrears come from

Pension arrears come from a handful of recurring situations. The largest is a pay-commission revision of pension: when a pay commission revises the pension of existing pensioners with effect from a past date, the revised pension is implemented only after the orders and the concordance tables issue, so the pensioner is owed the difference from the effective date. The 7th Central Pay Commission revision was effective from 1 January 2016 and the concordance tables followed on 6 July 2017. The second source is a dearness-relief revision, effective from 1 January or 1 July but notified some months later, which generates a few months of dearness-relief arrears twice every year.

The other sources are less frequent. A pension sanctioned after the date of retirement carries arrears from retirement, though a provisional pension under Rule 62 of the CCS (Pension) Rules, 2021, the payment older instructions call an anticipatory pension, usually bridges that gap and keeps the arrears small. A correction of an under-fixed pension, where the qualifying service or the emoluments were understated, carries arrears from when the error began. A court or tribunal order in the pensioner’s favour carries arrears for the period it covers. A delayed restoration of commuted pension, where the restoration after 15 years is given effect late, carries arrears of the restored portion. And a pension stopped because a life certificate was not filed on time generates arrears for every month it was not credited.

How the arrears are worked out, and the statement the pensioner is entitled to

The arrears are the difference, month by month, between the pension that should have been paid and the pension actually paid, with dearness relief applied on the revised basic pension for each month at the rate then in force. That working is not informal. Paragraph 11(E)(i)(a) of the Central Pension Accounting Office scheme requires the Centralised Pension Processing Centre of the bank to prepare a “Due and Drawn Statement” in the form at Annexure XV before making any payment of arrears, requires a checker to verify its correctness before the amount is credited, and requires a copy to be provided to the pensioner or family pensioner, physically or electronically, in all cases.

That last requirement is the one most pensioners do not know they can rely on. A pensioner who receives an arrears credit without a Due and Drawn Statement is entitled to ask the pension account holding branch for it, and the branch is required to be able to access it. Paragraph 11(E)(i) also requires the Centralised Pension Processing Centre to keep the revised special seal authority in the pensioner’s electronic and physical folder, viewable by the branch, and to record the revision authority in the Index Register at Annexure XI. Where a revision also increases the retirement gratuity or death gratuity, paragraph 11(E)(b) allows that additional amount to be authorised for payment by the same amendment authority.

Who authorises and who pays the arrears

Two different offices pay arrears, and which one pays depends on how long the case took. Paragraph 24(i) of the Central Pension Accounting Office scheme, on the authority of paragraph 7.5.5 of the Civil Accounts Manual, 2024, requires the Pay and Accounts Office itself to pay the arrears of pension in cases which have been delayed for over one year, and to mention the detail of the arrears paid and the month of commencement in the Pension Payment Order when it forwards that order to the Central Pension Accounting Office. In all other cases the arrears and the future monthly pension are authorised to the Centralised Pension Processing Centre of the bank, through the Pension Payment Order transmitted to the Central Pension Accounting Office.

For an ordinary revision or correction after the pension is already running, the route is the second one. The Central Pension Accounting Office issues an amendment or revised special seal authority carrying the revised rates and the date from which each is effective, the Centralised Pension Processing Centre enters it into its system, prepares the Due and Drawn Statement, and credits the arrears to the pensioner’s account along with the higher monthly pension going forward. The Pension Payment Order number does not change on a revision; the revised authority is issued under the existing number.

Dearness relief arrears

Dearness relief arrears are the one category a pensioner never has to claim. Dearness relief is revised with effect from 1 January and 1 July each year, and the Department of Expenditure order fixing the new rate issues some months after the effective date, so two or three months of arrears accrue on each revision. On receiving the order, the disbursing bank computes and pays those arrears automatically, in the month it implements the revised rate, without any application from the pensioner.

Dearness relief also drives the size of arrears from every other source, because the relief is payable on the revised basic pension for each past month at the rate in force in that month, not at the current rate. A correction that raises the basic pension by Rs. 4,000 with effect from a date when dearness relief stood at 50%, running through a period in which it rose to 55%, produces relief arrears that change part way through the period. An arrears working that applies one flat relief rate across the whole period is wrong, and the Due and Drawn Statement is where that error shows up.

The 2020 dearness relief freeze, where no arrears were paid

One large revision in recent years produced no arrears at all, and it is the standing exception to everything above. Department of Expenditure Office Memorandum No. 1/1/2020-E.II(B) dated 23 April 2020 froze dearness allowance and dearness relief at 17% for three consecutive instalments, covering 1 January 2020 to 30 June 2021, on the fiscal position during the pandemic. Pensioners continued to draw relief at the 17% already in force; what stopped was the increase.

The rate resumed at 28% from 1 July 2021 by an order of the same number dated 20 July 2021, and the three withheld instalments were subsumed prospectively into that figure. No arrears were paid in cash for the 18 frozen months. A pensioner who reasons that a retrospective revision always generates arrears will get this case wrong: the government can, and here did, decide that a revision takes effect prospectively only, and the entitlement to arrears follows the order rather than the arithmetic.

Arrears on the 7th Central Pay Commission pension revision

The 7th Central Pay Commission revision of pension shows how an order can cap arrears at a date of its own choosing. Pre-2016 pensioners were revised under two routes: a straight multiple of 2.57 on the pre-revised basic pension under Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/2016-P&PW(A)(ii) dated 4 August 2016, and the notional pay fixation method under Office Memorandum No. 38/37/2016-P&PW(A) dated 12 May 2017, with the concordance tables issued on 6 July 2017 and Tables 51 and 52 revised on 13 September 2017. Paragraph 5 of the 2017 order gives the pensioner whichever route is more beneficial.

Paragraph 17 of that order bars arrears for any period before 1 January 2016. The notional method steps the pay drawn at retirement forward through each intervening pay commission, but those intermediate figures exist only to compute the revised pension; no money follows them. So a pensioner who retired in 1996 draws the revised pension from 1 January 2016 and arrears from that date to the date of implementation, and nothing for the twenty years the notional working passes through. The same shape will govern the 8th Central Pay Commission revision.

Interest under Rule 65, where the department caused the delay

Interest on a delayed pension is a departmental liability, not an automatic addition to every arrears payment. Rule 65 of the CCS (Pension) Rules, 2021 provides that where a pension, family pension or gratuity, including a provisional one, has not been sanctioned or its payment is delayed, and the delay is clearly established as attributable to administrative reasons or a lapse, interest is paid on the arrears at the rate and in the manner applicable to General Provident Fund balances. That rate has stood at 7.1% a year since the quarter beginning 1 April 2020 and is declared quarterly by the Department of Economic Affairs.

The finding of a lapse is a condition, and there is a named officer who has to make it. Rule 65(2) requires every case of delayed payment in a Ministry or Department, and in its attached and subordinate offices, to be considered by the Secretary of that Ministry or Department or an officer not below Joint Secretary authorised by the Secretary; where the delay is found to be due to administrative reasons or a lapse, interest is sanctioned, and Rule 65(4) requires responsibility to be fixed and disciplinary action taken against the officials responsible. Department of Pension and Pensioners’ Welfare OM No. 12(9)/2020-P&PW(C)-6450 dated 23 February 2022 restates that procedure in its first paragraph. Arrears from a pay-commission revision or a liberalisation of the rules are inside Rule 65: clause (f) of sub-rule (5) runs interest on them from three months after the date of the revising order up to the date of payment, where the delay after that order is administrative. The time the government takes to issue the revision order does not count; only a delay in paying after it does. The interest on delayed pension article covers the sanction route in full.

Bank compensation at 8% for a credit made after the due date

A second and quite separate interest liability sits on the bank, and it is automatic. Paragraph 11(H) of the Central Pension Accounting Office scheme provides that the Centralised Pension Processing Centre should compensate the pensioner or family pensioner for delay in crediting pension or family pension, including arrears, at a fixed rate of 8% a year for the delay after the due date of payment. The compensation is to be credited to the pensioner’s account without any claim from the pensioner, on the same day the bank affords credit for the revised pension or the pension arrears. The authority is Reserve Bank of India Master Circular No. RBI/2025-26/05 dated 1 April 2025.

Paragraph 11(H) also provides that the Centralised Pension Processing Centre shall not claim reimbursement of that interest from the Central Pension Accounting Office through the scrolls, so the cost stays with the bank that was late. The two regimes should not be run together: Rule 65 attaches to a departmental failure to sanction or authorise and requires a finding at Secretary level, while paragraph 11(H) attaches to the bank’s own failure to credit by the due date and requires nothing from the pensioner at all. A pensioner whose arrears reached the account weeks after the bank received the revised authority should check the credit for the compensation entry, because it is due whether or not anyone asks.

Arrears held back because a life certificate was late

A pension stopped for want of a life certificate generates arrears, and the route to getting them turns on a three-year line. Where the arrears relate to a period of less than three years and were not credited because the prescribed certificate came in late, paragraph 24(v) of the Central Pension Accounting Office scheme allows the Centralised Pension Processing Centre to pay them after obtaining specific orders of the manager or officer in charge of the bank, who releases the payment subject to verifying the bona fides of the claim and ensuring that no double payment or over-payment results. The authority is the Controller General of Accounts’ U.O. No. 1(7)(1)2000/TA/377 dated 19 August 2002. Such payments are to be mentioned prominently in the payment scrolls.

Beyond three years the case leaves the bank. Paragraph 24(vi) requires that where a pension has not been credited for three years or more, the disburser’s portion of the Pension Payment Order be returned to the Central Pension Accounting Office with an endorsement specifying the date up to which the pension was credited, and forwarded on to the issuing authority to update its record. If the pensioner then reappears with a life certificate, the Centralised Pension Processing Centre takes a written request explaining why the certificate was not filed on time, routes it through the Central Pension Accounting Office to the Pay and Accounts Office, which obtains a fresh sanction from the pension sanctioning authority, and payment restarts under a fresh special seal authority, with the arrears paid at that stage. The same procedure applies where the Pension Payment Order was never returned despite a gap of three years or more.

Arrears when the pensioner dies: life time arrears

Arrears left unpaid when a pensioner dies are called life time arrears, and they are payable to a nominee rather than lapsing. Paragraph 25.1 of the Central Pension Accounting Office scheme settles the base rule first: pension is drawn for the day of the pensioner’s death irrespective of the time of the death. On receiving a death certificate, the Centralised Pension Processing Centre works out the arrears due to the deceased, or any over-payment made, and acts immediately to recover an over-payment from the deceased’s account under the undertaking obtained from the pensioner before retirement.

Where a valid nomination exists, the nominee applies to the pension account holding branch with the pensioner’s half of the Pension Payment Order. The branch records the date of death on that half, verifies that the payment is actually due to the deceased pensioner and that the nominee’s particulars match the nomination, and intimates the Centralised Pension Processing Centre, which credits the amount to the claimant’s account. Where no valid nomination exists, the arrears are paid under the procedure in Department of Pension and Pensioners’ Welfare Office Memorandum No. 1/22/2012-P&PW(E) dated 10 July 2013. The same provisions apply where a family pension ceases on the death of the family pensioner or on that person becoming ineligible.

Nomination in Form A under the 1983 Rules

The nomination that decides who receives life time arrears is filed in Form A, in triplicate, under the Payment of Arrears of Pension (Nomination) Rules, 1983, notified on 10 September 1983. Paragraph 25.2 of the Central Pension Accounting Office scheme, read with Department of Pension and Pensioners’ Welfare letter No. 1/2/(40)/2022-P&PW(E) dated 31 March 2022, requires every employee retiring after the notification of those Rules to submit Form A to the Head of Office or department from which they retire, while filling up the pension papers. The Head of Office returns a duly attested duplicate to the pensioner and passes the triplicate copy to the pension disbursing authority along with the Pension Payment Order, through the Pay and Accounts Office and the Central Pension Accounting Office.

A nomination can be changed later, and the commonest reason is that the nominee has died first. The pensioner files a fresh Form A in triplicate with the pension disbursing authority, either in modification of the existing nomination or as a fresh one, and the Centralised Pension Processing Centre must return the attested duplicate to the pensioner within thirty days of receipt if the branch has not already done so, retain the original in the pensioner’s folder, and forward the triplicate to the Head of Office. Whether a nomination is on record is not left to memory: paragraph 11(G) requires the status of the nomination under the 1983 Rules to be shown on the monthly pension slip the bank sends by SMS, WhatsApp or e-mail.

The three-year restriction on a belated claim

A pension is a continuing right, and that shapes how far back arrears can be claimed. Because the pension falls due month after month, a wrong in the pension is a continuing wrong giving a fresh cause of action each month, so the entitlement to a correctly fixed pension is not defeated merely because the pensioner was slow to raise it. That principle comes from M.R. Gupta v. Union of India, (1995) 5 SCC 628, and it means a pensioner can seek the correct fixation prospectively however long the delay.

The arrears are treated differently from the entitlement. Where a pensioner makes a belated claim, the courts normally restrict the arrears to about three years preceding the date of the writ petition rather than allowing them back to when the wrong began. The rule comes from Union of India v. Tarsem Singh, (2008) 8 SCC 648, and it rests on the doctrine of delay and laches under Article 226 of the Constitution: a judicial rule of prudence against stale claims, not a statutory limitation, so no statute bars a pension claim. The restriction is not absolute. Where the government’s own order fixes a different cut-off date for the arrears, the courts have declined to confine the arrears to three years, and accrued arrears have been protected as property under Article 300A. A pensioner with a genuine but old grievance can therefore secure the correct pension going forward, and usually about three years of arrears, but not always the whole backlog.

Negative arrears: recovery of an excess payment

The Due and Drawn Statement runs in both directions, and a revision can show that a pensioner was overpaid rather than underpaid. Paragraph 11(E)(c) of the Central Pension Accounting Office scheme requires the Centralised Pension Processing Centre to prepare the same Annexure XV statement where an excess payment has been made, to have a checker verify it, and to provide it to the pensioner; paragraph 11(E)(d) requires the recoveries to be recorded in the remarks column of the Index Register at Annexure XI. The bank’s ability to recover rests on the undertaking the pensioner signs before retirement when submitting the pension papers.

Recovery is not unlimited, and the limits come from the courts rather than the scheme. In State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, decided on 18 December 2014, the Supreme Court held recovery impermissible from Group C and Group D employees, from employees who have retired or are due to retire within one year of the recovery order, where the excess was paid over a period exceeding five years before the order was issued, where the employee was wrongly required to discharge the duties of a higher post, and in any other case where recovery would be so harsh as to outweigh the employer’s right to recover. DoPT Office Memorandum No. 18/03/2015-Estt.(Pay-I) dated 2 March 2016 directs ministries to follow that decision. Most pensioners facing recovery of an old excess fall inside the retired-person limb, and the recovery of overpayment from pension article sets out how the bar is invoked.

Section 157 relief and Form No. 39

Pension arrears are taxable in the year they are received, and because they relate to earlier years, receiving them in a lump sum can push the pensioner into a higher slab than if the pension had arrived on time. Section 157 of the Income-tax Act, 2025 corrects for that. It recomputes the tax as if the arrears had been received in the years they relate to and allows the pensioner the difference, so the bunching costs no extra tax. The section names arrears of family pension at Section 157(1)(d), by reference to the family pension defined in Section 93(1)(d), as well as arrears of salary at Section 157(1)(a). Section 157(2) bars the relief on any income for which a deduction has been claimed at serial 12 of the Section 19(1) Table, which is the payment received on voluntary retirement. The Section 157 relief article sets out the four-step computation in the rule 73 Table.

The relief is not automatic. Section 157(1) grants it on an application to the Assessing Officer, and from tax year 2026-27 that application is Form No. 39 under rule 73 of the Income-tax Rules, 2026. Rule 73(3) requires the Form No. 39 particulars to be furnished on or before the due date specified under Section 263(1)(c), which for a pensioner is 31 July of the financial year following the tax year, so the claim for tax year 2026-27 runs to 31 July 2027. For the financial year 2025-26 return, assessed under the repealed Income-tax Act, 1961, the form is Form 10E under Rule 21AA. Where relief is claimed in the return with no Form No. 39 on record, the claim has nothing to verify against at processing under Section 270(1)(a)(ii), and the pensioner receives an intimation under Section 270(1)(d). Section 157 operates on tax already computed rather than as a deduction from income, so it survives the default regime under Section 202(1) as well as the optional regime under Section 202(4).

Tax deducted at source on arrears

The disbursing bank deducts tax at source on a service pension under Section 392 of the Income-tax Act, 2025, and that extends to the arrears. Section 16(b) brings a pension within the head Salaries and Section 15(2) treats the former employer as an employer, which is why a pension is deducted against like a salary at all. Section 392(4)(a)(ii) requires the person paying to take into account any relief allowable under Section 157 when computing the deduction, so a pensioner who furnishes the Form No. 39 particulars to the bank should see the relief inside the deduction rather than as a refund a year later. A pensioner who prefers can let the bank deduct on the gross and claim the relief in the return, having furnished Form No. 39 by the rule 73(3) date.

Family pension is treated differently, because it is taxed as income from other sources rather than as salary. Section 392 does not reach it, and the bank does not ordinarily deduct at source on family pension arrears; the family pensioner accounts for the arrears in the return and claims the relief there, again on Form No. 39. That the relief reaches a family pension at all is express rather than incidental, since Section 157(1)(d) names it. Paragraph 11(F) of the Central Pension Accounting Office scheme makes the Centralised Pension Processing Centre responsible for the deduction as the drawing and disbursing agency, and requires it to issue Form 16 every year even where no tax was deducted, if the pensioner asks for it in writing. The income tax for pensioners article sets out the taxation of a pension and a family pension in full.

A worked example

Take a pensioner whose basic pension is corrected upward by Rs. 4,000 a month with effect from a date 30 months earlier. The basic-pension arrears are Rs. 4,000 for 30 months, or Rs. 1,20,000. Dearness relief runs on that Rs. 4,000 for each of the 30 months at the rate in force in that month, so if the relief stood at 50% for the first 12 months and 55% for the remaining 18, the relief arrears are Rs. 24,000 plus Rs. 39,600, or Rs. 63,600. The total credited is Rs. 1,83,600, and the Due and Drawn Statement should show the month-by-month build-up of both components.

For tax, the whole Rs. 1,83,600 is received in one year but relates to 30 months across earlier years, so the pensioner furnishes Form No. 39, splits the arrears into the tax years they actually relate to using the arrears statement, and is taxed under Section 157 as if each slice had been received in its own year. Where the correction followed a belated claim rather than a departmental revision, the arrears might have been restricted to about three years before the claim under Union of India v. Tarsem Singh, which in this example still covers the whole 30 months. If the bank credited the Rs. 1,83,600 after the due date of payment, paragraph 11(H) adds compensation at 8% a year for the period of that delay, without any claim.

What a pensioner should check

Errors in an arrears calculation are common enough that four checks are worth running on every credit. The first is the Due and Drawn Statement itself: paragraph 11(E)(i)(a) entitles the pensioner to a copy in every case, and without it none of the other checks can be made. The second is the effective date, which should be the date the revision or correction takes effect; a shortened period understates the arrears. The third is the monthly shortfall, which should be right for each month and should change wherever the revision itself changed over the period. The fourth is the dearness relief, which should be applied on the revised basic pension at the rate in force in each month, not at one flat rate across the period.

Where the figures look short, the pensioner can trace them against the revised special seal authority and, for a pay-commission revision, against the concordance table for the pre-revised pay, and take up any discrepancy through the grievance channel of the Department of Pension and Pensioners’ Welfare. An under-computed arrears is itself a shortfall in a due pension and can be corrected, with the further arrears paid, but the three-year rule on belated claims is a reason not to sit on a discrepancy for years.

Pension arrears and the 8th Central Pay Commission

The next large tranche of pension arrears will follow the 8th Central Pay Commission, constituted by Ministry of Finance, Department of Expenditure Resolution F. No. 01-01/2025-E.III(A) dated 3 November 2025. When it reports and the pension is revised, the arrears will run from the effective date of the revision to the date the revised pension is implemented, exactly as they did on the 7th Central Pay Commission revision from 1 January 2016.

No figure for those arrears can be stated until the Commission reports, the revision is notified, and the effective and implementation dates are known. What can be stated is the shape: a revised pension from an effective date, arrears for the gap before implementation, a Due and Drawn Statement evidencing the working, no Rule 65 interest because the delay arises from the process rather than a lapse, bank compensation at 8% only if the credit itself is late, and Section 157 relief on the lump sum through Form No. 39. Whether that revision pays arrears at all for periods before its effective date will be settled by the implementing order, as paragraph 17 of the 12 May 2017 order settled it last time.

Frequently Asked Questions (FAQs)

What are pension arrears?
Pension arrears are the lump sum that becomes payable when a pension for a past period was underpaid or not paid, and is later made good. They arise most often when a pension is revised at a pay commission with effect from an earlier date, when dearness relief is revised with retrospective effect, when a pension is sanctioned late, or when an under-fixed pension is corrected. The arrears are the difference between what should have been paid and what was actually paid, for the intervening months.
How is the arrears figure worked out, and does the pensioner see the working?
The Centralised Pension Processing Centre of the bank prepares a Due and Drawn Statement in the form at Annexure XV of the Scheme for Payment of Pensions to Central Government Civil Pensioners through Authorised Banks, Sixth Edition, 2026, setting out what was due and what was drawn for each month of the period. Paragraph 11(E)(i)(a) requires a checker to verify the statement before the amount is credited, and requires a copy to be provided to the pensioner, physically or electronically, in all cases. A pensioner who has not received one may ask for it.
Do pension arrears carry interest?
Two separate regimes apply and they are often confused. Interest under Rule 65 of the CCS (Pension) Rules, 2021 is payable at the General Provident Fund rate, 7.1% a year since the quarter beginning 1 April 2020, but only where the delay in sanctioning or paying the pension, family pension or gratuity is established as attributable to administrative reasons or a lapse. Separately, paragraph 11(H) of the Central Pension Accounting Office scheme provides that the bank should compensate the pensioner at a fixed 8% a year where it credits the pension or the arrears after the due date, automatically and without any claim. The time taken to issue a pay-commission or dearness-relief revision order attracts neither, but Rule 65(5)(f) runs interest on revision arrears paid more than three months after the revising order where that later delay is administrative, and paragraph 11(H) applies to revised pension or arrears the bank credits late.
Does the pensioner have to claim the bank compensation for a late credit?
No. Paragraph 11(H) of the Central Pension Accounting Office scheme, on the authority of Reserve Bank of India Master Circular No. RBI/2025-26/05 dated 1 April 2025, requires the compensation to be credited to the pensioner’s account automatically without any claim from the pensioner, on the same day the bank affords credit for the revised pension or the pension arrears. The Centralised Pension Processing Centre cannot claim reimbursement of that interest from the Central Pension Accounting Office, so the cost falls on the bank.
How are dearness relief arrears paid?
Dearness relief is revised twice a year with effect from 1 January and 1 July, but the order is usually issued some months later, so a few months’ dearness relief arrears accrue. The disbursing bank computes and pays these arrears automatically on receiving the dearness relief order, without the pensioner having to apply, usually in the month it implements the revised rate.
Were arrears paid for the dearness relief frozen during the pandemic?
No. Department of Expenditure Office Memorandum No. 1/1/2020-E.II(B) dated 23 April 2020 froze dearness allowance and dearness relief at 17% for three instalments, covering 1 January 2020 to 30 June 2021. The rate resumed at 28% from 1 July 2021 by an order of the same number dated 20 July 2021, and the three withheld instalments were subsumed prospectively into that 28%. No arrears were paid in cash for the 18 frozen months. It is the one large case in recent years where a revision generated no arrears at all.
How far back can pension arrears be claimed?
A pension is a continuing right, so the entitlement itself is not lost by delay, but where a pensioner makes a belated claim, the courts normally restrict the arrears to about three years preceding the date of the petition. This is a judicial rule against delay, applied under Article 226 of the Constitution, not a statutory limitation, and it can be displaced where the government’s own order fixes a different cut-off date for the arrears.
What happens to arrears the bank stopped paying because the life certificate was late?
It turns on a three-year line. Where the arrears relate to a period of less than three years, paragraph 24(v) of the Central Pension Accounting Office scheme lets the Centralised Pension Processing Centre pay them after obtaining specific orders of the branch manager or officer in charge, who releases the payment on verifying that the claim is genuine and that no double payment results, on the authority of the Controller General of Accounts’ U.O. No. 1(7)(1)2000/TA/377 dated 19 August 2002. Where the pension has not been credited for three years or more, paragraph 24(vi) requires the disburser’s portion of the Pension Payment Order to go back to the Central Pension Accounting Office, and restarting payment needs a written request from the pensioner, a fresh sanction from the pension sanctioning authority and a fresh special seal authority.
Who gets the arrears if the pensioner dies before they are paid?
The nominee, where a valid nomination exists. Under paragraph 25.1 of the Central Pension Accounting Office scheme, pension is drawn for the day of the pensioner’s death whatever the time of death, and arrears accruing after death are paid to the person nominated in Form A under the Payment of Arrears of Pension (Nomination) Rules, 1983, notified on 10 September 1983. The nominee applies to the pension account holding branch with the pensioner’s half of the Pension Payment Order, and the Centralised Pension Processing Centre credits the amount after verifying the nomination particulars. Where no valid nomination exists, the arrears are paid under the procedure in Department of Pension and Pensioners’ Welfare Office Memorandum No. 1/22/2012-P&PW(E) dated 10 July 2013.
How does a pensioner file or change the nomination for life time arrears?
In Form A, in triplicate. Under paragraph 25.2 of the Central Pension Accounting Office scheme, read with Department of Pension and Pensioners’ Welfare letter No. 1/2/(40)/2022-P&PW(E) dated 31 March 2022, every retiring employee files Form A in triplicate with the Head of Office while filling up the pension papers, and the Head of Office returns a duly attested duplicate to the pensioner. A pensioner who wants to change the nomination later, typically because the nominee has died first, files a fresh Form A in triplicate with the pension disbursing authority, which must return the attested duplicate within thirty days. Whether a nomination is on record is printed on the monthly pension slip.
Can the bank recover an excess payment out of the arrears?
Yes, and it does so against an undertaking the pensioner signs before retirement, when the pension papers are submitted to the Head of Office. Paragraph 11(E)(c) of the Central Pension Accounting Office scheme requires the same Due and Drawn Statement to be prepared and given to the pensioner where an excess payment has been made. The recovery is not unlimited: in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, decided on 18 December 2014, the Supreme Court barred recovery from Group C and Group D employees, from employees who have retired or are due to retire within a year of the recovery order, and where the excess was paid over a period exceeding five years before the order.
Are pension arrears taxable, and is there any relief?
Pension arrears are taxable in the year they are received, but they relate to earlier years, so receiving them in a lump sum can push the pensioner into a higher slab. Section 157 of the Income-tax Act, 2025 gives relief by spreading the arrears notionally over the years they relate to, so the pensioner is taxed as if the arrears had been received in those years. The application is Form No. 39 under rule 73 of the Income-tax Rules, 2026, due under rule 73(3) on or before the date specified in Section 263(1)(c), which for a pensioner is 31 July of the financial year following the tax year.
Does Section 157 relief survive the new tax regime?
Yes. Section 157 operates on the tax already computed rather than as a deduction from income, so it applies under the default regime in Section 202(1) as well as the optional regime under Section 202(4). Each year in the computation is taxed on the law and the regime that applied to that year, so a single Form No. 39 can carry the default regime for the year of receipt and the old regime for an earlier year.
Is tax deducted at source on pension arrears?
On a service pension, yes. The disbursing bank deducts under Section 392 of the Income-tax Act, 2025, because Section 16(b) brings a pension within the head Salaries and Section 15(2) treats the former employer as an employer. Section 392(4)(a)(ii) requires the payer to take the Section 157 relief into account when computing the deduction, so a pensioner who furnishes the Form No. 39 particulars to the bank should see the relief inside the deduction rather than as a refund a year later. Family pension is taxed as income from other sources, so Section 392 does not reach it and the bank does not ordinarily deduct on family pension arrears.
Did the 7th Central Pay Commission revision pay arrears for periods before 2016?
No. Paragraph 17 of Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/2016-P&PW(A) dated 12 May 2017 bars arrears for any period before 1 January 2016. The notional pay fixation carries the retiree’s pay forward through each intervening pay commission for the limited purpose of computing the revised pension, and the money runs only from the effective date of the revision, not from the notional dates used in the working.

External references

References

  1. Central Pension Accounting Office, “Scheme for Payment of Pensions to Central Government Civil Pensioners through Authorised Banks”, Sixth Edition, 2026: paragraph 11(E) (revision of pension and payment of arrears, the Due and Drawn Statement at Annexure XV), paragraph 11(F) (income tax and Form 16), paragraph 11(G) (pension slip and nomination status), paragraph 11(H) (compensation at 8% a year for a delayed credit), paragraph 24 (procedure for payment of arrears of pension) and paragraph 25 (nomination for life time arrears).
  2. Central Civil Services (Pension) Rules, 2021, Rule 62 (provisional pension) and Rule 65 (interest at the General Provident Fund rate on a pension, family pension or gratuity delayed for administrative reasons), read with Office Memorandum F. No. 12(9)/2020-P&PW(C)-6450 dated 23 February 2022.
  3. Reserve Bank of India, Master Circular No. RBI/2025-26/05 dated 1 April 2025, on compensation for delayed credit of pension and arrears by agency banks.
  4. Controller General of Accounts, U.O. No. 1(7)(1)2000/TA/377 dated 19 August 2002, on payment of arrears withheld for less than three years on late submission of prescribed certificates; and paragraph 7.5.5 of the Civil Accounts Manual, 2024.
  5. Payment of Arrears of Pension (Nomination) Rules, 1983, notified on 10 September 1983, read with Department of Pension and Pensioners’ Welfare letter No. 1/2/(40)/2022-P&PW(E) dated 31 March 2022 and Office Memorandum No. 1/22/2012-P&PW(E) dated 10 July 2013 (arrears where no nomination exists).
  6. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 38/37/2016-P&PW(A)(ii) dated 4 August 2016 and Office Memorandum No. 38/37/2016-P&PW(A) dated 12 May 2017, paragraph 5 (more beneficial of the two options) and paragraph 17 (no arrears for any period before 1 January 2016), with the concordance tables of 6 July 2017.
  7. Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1/2020-E.II(B) dated 23 April 2020 (freezing dearness allowance and dearness relief at 17%) and the order of the same number dated 20 July 2021 (resumption at 28% from 1 July 2021, no arrears for the frozen period).
  8. Union of India v. Tarsem Singh, (2008) 8 SCC 648, restricting arrears on a belated claim to about three years preceding the writ petition; M.R. Gupta v. Union of India, (1995) 5 SCC 628, on the continuing wrong; and State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, decided on 18 December 2014, on recovery of an excess payment, with DoPT Office Memorandum No. 18/03/2015-Estt.(Pay-I) dated 2 March 2016.
  9. Income-tax Act, 2025, Sections 15, 16, 19(1), 93(1)(d), 157, 202, 263(1)(c), 270 and 392; Income-tax Rules, 2026, rule 73 and Form No. 39, relief on arrears of salary and pension received in a lump sum.
  10. Ministry of Finance, Department of Expenditure, Resolution F. No. 01-01/2025-E.III(A), dated 3 November 2025, constituting the 8th Central Pay Commission.