Budget 2021 for Senior Citizens: Finance Minister Nirmala Sitharaman, though presenting the Budget 2021, has proposed no filing of Income Tax Return (ITR) by senior citizens who are above 75 years of age and have only pension and interest earnings. Pension from the ex-employer is taxed below the earnings tax head of Salary though family members pension is taxed as ‘income from other sources’. Interest earnings received from SCSS, bank fixed deposit and so on is taxed as per one’s earnings slab below the head ‘income from other sources’.
The bank, nevertheless, will deduct the essential tax just before paying to them. It is critical to note that they have not been exempted from paying tax but only from filing ITR offered the eligibility is there.
Under, Section 80TTB of the earnings tax act, interest earnings earned from deposits qualifies for a deduction from one’s gross total earnings. The maximum limit below section 80TTB is Rs 50,000 in a year. This section is obtainable to senior citizens considering that April 1, 2018. Importantly, the advantage of section 80TTA, which enables a deduction of the interest earnings (up to Rs 10,000) from the savings account, is not obtainable to the senior citizens.
For these much less than 60 years of age, earnings up to Rs 2.5 lakh in a economic year is tax-exempt and they are not essential to file ITR. For these who are 60 years or above but much less than 80 years, the limit is Rs 3 lakh, though for these who are 80 years or more, the exemption limit is Rs 5 lakh and they are also not essential to file ITR.
On earnings involving Rs 3 lakh and Rs 5 lakh, the earnings tax price is 5 per cent, though on earnings involving Rs 5 lakh and Rs 10 lakh, the earnings tax price is 20 per cent, and on earnings above Rs 10 lakh, the tax price is 30 per cent.
For senior citizens who are 80 years or above, on earnings involving Rs 5 lakh and Rs 10 lakh, the earnings tax price is 20 per cent, though on earnings above Rs 10 lakh, the tax price is 30 per cent.
The proposal not to file ITR by senior citizens who are above 75 years of age and have only pension and interest earnings will come as a relief to the taxpayers.