Senior citizens above 75 years exempted from filing income tax return1 min read . Updated: 01 Feb 2021, 03:03 PM IST
- Budget 2021 eased the compliance burden for those earning only pension and interest, but they will have to continue paying tax
To ease the compliance burden on senior citizens who have been hit hard by the covid-19 crisis, finance minister Nirmala Sitharaman on Monday exempted individuals above 75 years from filing income tax returns (ITR). However, such individuals will have to continue to pay income tax at their respective tax slabs. The paying bank will deduct the necessary tax.
The exemption will be available to only those senior citizens who have no other income, but depend on pension and interest income from the bank hosting the pension account. The government will be notifying a few banks where account holders will be eligible for this exemption, said Sitharaman.
The individual will have to furnish a declaration to the bank. “The declaration shall be containing such particulars, in such form and verified in such manner, as may be prescribed. Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A of the Act, for the relevant assessment year and deduct income tax on the basis of rates in force," the Budget document said.
“Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year," it added.
This will certainly provide relief to senior citizens. “Senior citizens were on a par with other taxpayers, i.e., exemption from filing ITR only when taxable income does not exceed the basic exemption limit. Now, this is a specific exemption from filing ITR to senior citizens above 75 years, if their income is limited to pension and interest," said Shailesh Kumar, partner, Nangia & Co LLP.
According to Anil Chopra, group director, financial wellbeing, Bajaj Capital, it’s a big relief to this section of senior citizens. “Although they have to pay tax, but they need not file ITR."
The government’s move has fallen short of expectations, as experts were hoping that the salaried middle-class taxpayers would get some tax relief in the form of a hike in the standard deduction limit amid the covid-19 pandemic.
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