Senior Citizen with Pension & Interest Income only not required to file ITR
Budget 2021 proposes to exempt senior citizens who are 75 years or above from filing income tax returns if they have only pension and interest income in a financial year. As per the Budget 2021 proposals, senior citizens will not be required to file income tax returns (ITR) anymore. The bank paying income to them will deduct the necessary tax from their bank account.
Section 139 of the Act provides for filing of return of income. Sub-section (1) of the section provides that every person being an individual, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income.
In order to provide relief to senior citizens who are of the age of 75 year or above and to reduce compliance for them, it is proposed to insert a new section to provide a relaxation from filing the return of income, if the following conditions are satisfied:-
(i) The senior citizen is resident in India and of the age of 75 or more during the previous year;
(ii) 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;
(iii) This bank is a specified bank. The Government will be notifying a few banks, which are banking company, to be the specified bank; and
(iv) 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. This amendment will take effect from 1st April, 2021.
This has come after Budget 2018 had announced several tax law changes to provide more tax benefits to senior citizens. These include tax benefits such as introduction of a new section 80TTB in the Income Tax Act, 1961, deduction for medical expenditure in case of no health insurance coverage etc.
The government has also extended the deadline by which seniors can invest in Pradhan Mantri Vaya Vandana Yojana (PMVVY) to March 31, 2023. The maximum amount that can now be invested in the scheme is Rs 15 lakh from the previous limit of Rs 7.5 lakh as announced in Budget 2018.