A waiver was announced in the budget-2021 for the elderly aged 75 years and above. Finance Minister Nirmala Sitharaman said in the budget speech that taxpayers over 75 years will get an exemption from filing income tax returns. This declaration sounds good on paper, but all the conditions are attached to it. Let us see what the whole process is like in listening.
Know what is said in the budget
Speaking in the budget speech, the Finance Minister said that we are going to reduce the burden of legal problems on the elderly of 75 years or more. We are going to give exemption to senior citizens who have income from pension and interest only by filing IT. Their paying bank will automatically deduct the tax applicable on their income.
Let us take a look at this announcement
This announcement by the Finance Minister does not mean that the elders of income of 75 years or more who earn from pension and interest income do not have to pay income tax. Many senior citizens were very happy to hear this announcement of the budget because they felt that there is no need to pay their income tax now.
This exemption is not actually provided by paying taxes, but only for filing returns and all the conditions are attached to it. The first condition is that only pension and interest should be the source of earning of senior citizens. There should be no other means of earning.
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.
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 / she will also have to file ITR.
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.
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 refunds. 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.
Earned Gupta of ClearTax says that further 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 the issue needs further clarification from the Income Tax Department. In such a situation, it would be better for the elderly aged 75 years or more to file their returns as 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.