In the post, we will see some of the new updates on the ITR filing for senior citizens.
We will cover the following topics in this post:
- Introduction to ITR filing for senior citizens
- Conditions to be satisfied
- What is the new change in ITR filing for senior citizens?
- Key Points
Introduction to ITR filing for senior citizens
Union Budget 2021 stated that senior citizens above 75 years, who only have pension and interest as their income is exempted from filing the Income Tax Returns (ITR). The interest from income and pension deposited should be in the same bank. But they are not exempted from paying tax.
However, banks will usually deduct tax payable by the taxpayer and deposit it to the government. This amendment will be effective from 1st April 2021.
Conditions to be satisfied
- The senior citizen who is a resident of 75 age or more during the previous year
- Has a pension and no other income. However, he may have interest income from the same bank from which he will receive his pension income
- The central government will notify the list of specific banks allowed, which are a banking company to be the specified bank
- Has to furnish a declaration to the specified bank. It will contain particulars, in such form and verified in such manner, as prescribed
What is the new change in ITR filing for senior citizens?
Once the declaration is furnished, the specified bank will compute the income after the deduction under Chapter VI-A and rebate under Section 87A of the Act, for the relevant assessment year and deduct tax. Then, no need to furnish ITR for this assessment year.
After Budget 2018 had announced many laws to provide more tax benefits to senior citizens. These include a new Section 80TTB in the Income Tax Act, 1961, the deduction for medical expenditure in case of no health insurance coverage, etc.
Under Section 80TTB, they can claim up to Rs 50,000 interest income received from banks and post offices as a deduction from their income.
Earlier, they got tax-exemption for interest income from bank and post office savings accounts only up to Rs 10,000 under Section 80TTA. TDS limit for bank fixed deposit interest was also increased.
Budget 2018 increased the limit from Rs 30,000 to Rs 50,000 paid on health insurance premiums that can be claimed as a deduction from income. If a senior citizen does not have a medical insurance policy and has medical expenditure in an FY, then he can claim up to Rs 50,000 under Section 80D.
Earlier, if they were not covered by any medical insurance policy a deduction for medical expenditure up to Rs 30,000 was allowed for 80 age or above.
If suffering from critical illnesses as per Rule 11DD, that are covered under Section 80DDB deduction limit is raised from Rs 60,000 (for senior citizens) and Rs 80,000 (for very senior citizens) to Rs 1 lakh.
The deadline for seniors who can invest in Pradhan Mantri Vaya Vandana Yojana (PMVVY) is extended to March 31, 2023. The maximum amount that can be invested in this scheme is raised from Rs 7.5 lakh (Budget 2018) to Rs 15 lakh.
With that, we have come to the end of this post on ITR filing for senior citizens. Share your queries and opinion with us in the comment section below.