In the budget, the Finance Minister has announced exemption for senior citizens above 75 years of age by filing income tax returns. Now tax experts say that more clarification is needed about this announcement from the Income Tax Department. The government has combined this announcement with several conditions.
New Delhi. Finance Minister Nirmala Sitharaman made the same big announcement about tax in Budget 2021, that senior citizens 75 years or older will be exempted from filing income tax returns. After the announcement by the Finance Minister, there has been a lot of discussion about it. This announcement sounds good on paper, but all the conditions are attached to it. Let us see if the whole process is as it sounds.
Speaking in the budget speech, the Finance Minister said that we are going to reduce the burden of legal troubles on the elderly of 75 years or more. We are going to give exemption to senior citizens who have income only from pension and interest, by filing income tax return. Their Paying Bank will automatically deduct the tax applicable to their income. From this you can understand that the elders of income of 75 years or more who earn from pension and interest income do not need to pay income tax.
The conditional freedom given by the government is the
first condition: This exemption is not actually obtained from paying tax, but it is only for filing returns and all the conditions are attached to it. The first condition is that pension and interest should be the only means of earning of senior citizens. There should be no other means of earning.
Second condition: The second condition is that to get this exemption, the pension account and the fixed deposit must be in the same bank so that the banks can deduct the tax applicable on the source. So that the assessee does not have to pay tax separately.
Third condition:The third condition is that senior citizens holding fixed deposits in two or more banks will not be exempt from filing ITR. If a senior citizen earns income from post office deposits and other fixed income schemes, then he will also have to file ITR.
Fourth condition: The fourth condition is that senior citizens who earn income from mutual funds, shares, insurance schemes, debt instruments, will not be exempt from filing returns.
Fifth condition: The fifth and final condition is that in case of high tax deposits in the treasury, senior citizens will have to file IT returns for refund. The thinking behind this is that if a senior citizen can manage more than one bank account and earn from more than one medium, then he can also file income tax return.
Needs clarification on this announcement from Income Tax Department
Earned Gupta of ClearTax says that more clarification is needed from the tax department on this issue. As of now, it seems that for a senior citizen to get an exemption from the return file, his bank account, bank deposit and pension income should be in the same specialized bank. For the convenience of ITR file exemption for senior citizens having accounts with different banks, we will need interconnectivity of all banks so that these banks can exchange information related to taxability of senior citizen tax payer among themselves.
Experts related to tax matters say that more clarification is needed from the Income Tax Department on this issue right now. In such a situation, it would be better for the elderly of 75 years or more to file their returns because you are not exempted from income tax. In such a situation, if you have a CA to file ITR, then it is not going to be difficult for you to file ITR anyway.
