Varanasi: Finance Minister Nirmala Sitharaman on Monday proposed exemption to pensioners above 75 years from filing Income Tax returns with having pension and bank interest as their source of income.
“We shall reduce the compliance burden on our senior citizens who are 75 years of age and above. For senior citizens who only have pension and interest income, I propose exemption from filing their Income Tax return,” Sitharaman said in her Budget speech for 2021-22.
The exemption will be available to only those pensioners who have no other income, but depend on pension and interest income from the bank hosting the pension account. The government will be notifying a few banks where account holders will be eligible for this exemption, Sitharaman added.
The individual will have to furnish a declaration to the 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 pensioner 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,” the Budget document said.
“Once this is done, there will not be any requirement of furnishing return of income by such pensioner for this assessment year,” it added.
This will certainly provide procedural relief to pensioners from filing ITR only when taxable income does not exceed the basic exemption limit.
However, it seems beneficial for the senior citizens who earlier have to claim the refund of TDS on interest or pension as now the bank is going to deduct tax as per the slab rate after allowing the deduction u/c VIA or relief u/s 87A.
Presently, pensioners of the age of 60 years or above, who don’t have any income from business or profession, are exempted from paying advance tax u/s 207 of the Income Tax Act.
Under section 80TTB, pensioners of the age of 60 years or above can claim up to Rs 50,000 interest income received from banks and post offices as a deduction from their income thereby making this type of interest income for senior citizens effectively tax-exempt up to Rs 50,000.
The salaried people who expecting some income tax relief after being affected by the COVID-19 pandemic may not yet get some relief and pensioners would not immediately get any relief.