Tax on pension payments or annuity payments

In case of pension payments they are taxable. Sometimes the entire amount will be taxable or else only a part of the pension payment will be taxable. All pension payments or annuity payments received should be reported in the tax returns. The pension payment will be fully taxable if the person enjoyed payments which are tax free in the previous years. In case if you have made any contributions after tax to your pension then only a part of the pension payment will be taxable. So there will be a part which is non taxable. In order to find this non taxable part one must know the amount of money that they have paid over the previous years to the pension plan or annuity plan. So the part which is non taxable should not be mentioned in the tax return form. For the calculation of this part there are two methods available. One is the simplified method and second method is the general method. Also the age of retirement also matters. If the person is retired before 55 years of age then he will have to pay an additional tax of 10%. But this additional tax can be removed if the pension is paid in equal instalments.