INTRODUCTION

Home with strong roof protects its members from rain, heat and Storm. Similarly Senior Citizens are shield whose experience and old age sense protects our house and nation from any type of problem. They worked hard in their whole life to give everything to their children and to nation. Hon’ble FM Smt. Nirmala Sitaraman begins tax proposals of Budget 2021 by offering pranaam to Senior Citizens. She said despite having foregone several basic necessities of their own, they have strived to build our nation. Therefore on 75th year of independence, she proposed that certain classes of Senior citizens who fulfill following conditions are not required to file return of income u/s 139(1). In place of Senior Citizens, banks are required to deduct TDS u/s 194P of Income-tax Act, 1961 and deposit tax into account of Govt.

Conditions for Relaxations in Return Filing for Senior Citizens

1. He is of 75 years or more during the year.

2. He is Resident in India.

3. He has only pension income and can derive bank interest from same bank in which pension is received. Therefore if he receives bank interest from any other bank then he cannot enjoy this relaxation.

4. The pension received should be received in banks as specified by Govt.

5. He is required to furnish declaration to specified bank.

Banks Are Liable to Deduct TDS Under Section 194P

When declaration is furnished, banks will compute income of Senior Citizen after deductions under Chapter VI-A i.e LIC premium, PPF, Mediclaim, deduction on specified diseases u/s 80DDB,etc. and rebate allowable u/s 87A and deduct tax on the basis of rate in force i.e. normal income tax slab rate.  Once this is done, there will not be any requirement of furnishing return of income by such Senior Citizen. The provisions of Section 194P will be made effective from 01/04/2021.

Instances When Relaxation Cannot Be Claimed by Senior Citizens

1. When he is Non-Resident

2. When he has income from any other source other than pension.

3. When he has interest income from any other bank other than bank in which pension is received.

4. When he does receives pension from specified banks.

No Relief on Tax Payment to Senior Citizens

Govt. has only given relaxation in filing returns of income on fulfilling certain conditions. It has not given relief on payment of taxes. The liability to pay taxes has been shifted to banks.

Other Tax Benefits to Senior Citizens

1. Increased Tax Exemption Limit- For Senior Citizens of 60-80 years-Rs.3,00,000/- and for Super Senior Citizens of above 80 years-Rs.5,00,000/-.

2. Interest from bank is not chargeable upto 50000/- u/s 80TTA.

3. Deduction of Rs.1lakhs u/s 80DDB on treatment of severe disease.

4. Standard deduction of Rs.50000/- on pension income.

5.  Deduction of Rs.50000/- on health insurance premium paid u/s 80D.

6. Exemption from paying advance tax if they do not have business or professional income.

7. Super Senior Citizens can physically file ITR-1(Sahaj) and ITR-4 (Sugam)

8. Aadhar Linking with PAN is not mandatory for Super Senior Citizens.

OUR COMMENTS

Government is making way out to reduce tax compliance burden on nearly Super Senior Citizens so that they can take rest in home. But the relaxation seems to be very narrow.  Govt. is working towards development of nation and for this it is stressing more and more on timely tax compliances and collection of taxes. Though filing of return is relaxed but at the cost of filing declaration to bank. Making of law may be easy task but its practical implementation is a bigger task. 

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The above comments do not constitute professional advice. The Author can be reached at [email protected] or visit website www.financialtreecompany.com . My name is CA Divya Agrawal and I am Practising Chartered Accountant, CEO and Founder of FINANCIAL TREE COMPANY (An online return filing and Tax Consultancy Company). We also upload educational videos in You tube and name of our channel is FINANCIAL TREE COMPANY. Our aim is to help people in improving their financial health by spreading knowledge and love. Stay Financially Fit and Healthy.

Author Bio

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Location: Bhilai, Chhattisgarh, IN
Member Since: 30 May 2019 | Total Posts: 36
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5 Comments

  1. Vipan kumar verma says:

    Just be fooling the 🇮🇳 Sr. Citizens in bringing them in three categories
    1. Sr. Citizens age groups 60 to 80 years.
    2. Super Sr.Citizens above 80 years.
    3. Now in Budget 2021 age limit 75 years.
    What a fun has made by our hon.F.M.
    In India there are lot of region & on the same types divided sr.citizens.

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