In an attempt to make life simpler for individual taxpayers, Finance Minister Nirmala Sitharaman declared in the 2021 Union Budget that senior citizens above 75 years of age who only have a pension and an interest as a means of revenue will be exempted from filing income tax returns. Sitharaman said during her budget speech, “In the 75th year of Independence of our country, the government shall minimize taxation pressure on senior citizens who are 75 years of age and above. For elderly people who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will subtract the required tax on their earnings. Senior citizens above the age of 75 are not exempted from paying tax. That being said, if they comply with certain requirements, they are exempted from filing income tax returns (ITR). Only in the situation where interest income is received from the same bank where the pension is held will the exemption from filing income tax returns be valid. Banks can subtract the income tax the taxpayer needs to pay and deposit to the government, as per the Budget. The prerequisite for this is that the individual should only have pension income and interest from a fixed deposit must accrue from the same lender.
Budget 2021 has agreed that a new clause be inserted to offer exemptions from the filing of income tax for elderly people over 75 years of age, according to the following requirements:
- The senior citizen lives in India and was 75 years of age or older in the subsequent year.
- An older person who has a pension and no other income. That being said, he or she may have interest income from the same bank where his or her pension income is earned.
- This bank is a bank that is listed. A few banks, which are financial entities, will be told by the central government to be the designated bank.He or she has to support the stated bank with a declaration. A declaration containing certain information shall be made in the form and checked in the manner prescribed.
- After the declaration has been furnished, the specified bank will be expected to measure the income of such a senior citizen on the grounds of the exemption allowable under Chapter VI-A and the rebate allowable under Section 87A of the Act for the specific year of assessment and to deduct the income tax on the basis of the rates in effect, as provided for in the Budget text. Once this is finished, there will be no provision for those senior citizens to have income return for this appraisal year, said the Budget.
- According to financial analysts, the government and the banks also need more clarification as to whether the waiver from filing tax returns will qualify for senior citizens receiving interest income from different banks.
