Budget 2021: To avail the benefit, an assesee may have have interest income from the same bank in which he is receiving his pension income.
Senior citizens of the age of 75 years or above, not having any other income apart from pension and interest income, are exempted from filing their return of income.
Union Budget 2021-22: Presently, senior citizens of the age of 60 years or above, who don’t have any income from business or profession, are exempted from paying advance tax u/s 207 of the Income Tax Act, even as assessees below 60 years of age, whose estimated tax liability for a financial year exceeds Rs 10,000, are required to pay advance tax.
Moreover, for super senior citizens aged 80 years and above, filing Income Tax Return (ITR) online is not mandatory, in case they are filing their return in ITR-1 and ITR-4 (Sugam).
Extending the benefits further for the elderly taxpayers, Finance Minister Nirmala Sitharaman has announced in the Union Budget 2021-22 that senior citizens of the age of 75 years or above, not having any other income apart from pension and interest income, are exempted from filing their return of income.
“Now, as per the Finance Bill 2021, senior citizens, who are of the age of 75 year or above, it is proposed to provide a relaxation from filing the return of income,” says Dr. Suresh Surana, Founder, RSM India.
However, Dr. Surana further says that to avail the benefit the following conditions have to be fulfilled:
He has pension income and no other income. However, in addition to such pension income he may have also have interest income from the same bank in which he is receiving his pension income
This bank is a specified bank. The government will be notifying a few banks, which are banking company, to be the specified bank; and
He shall be required to furnish a declaration to the specified 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. Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year,” says Dr. Surana, adding, “This is a welcome procedural relief but could have been extended to all the senior citizens (60 years and above) or super senior citizens (80 years and above) and the need to add one more threshold of age limit for senior citizens(75 years and above) could have been avoided.”
CA Geetanshu Bhalla, Mentor, The Virtual Compliance, however, says, “The restriction of having interest and pension income along with an additional restriction of interest from the same bank only, in which the pension income is received by the senior citizen, makes the provision applicable to a very small group of senior citizens. Further, mandatory filing of the declaration with the bank to opt for this option seems no relief to senior citizens.”
Describing the benefit of this measure, Bhalla says, “However, it seems beneficial for the senior citizens who earlier have to claim the refund of TDS on interest or pension as now the bank is going to deduct tax as per the slab rate after allowing the deduction u/c VIA or relief u/s 87A.”