The government has made it obligatory to do income tax return filing for every individual comprising senior citizens. But, the government gives income tax exemption for senior citizens or super senior citizens.
How do we determine which senior citizens fall in this category?
Nirmala Sitharaman, The finance minister in the Union Budget 2021, proclaimed that the government would reduce the conformity burden on senior citizens who are 75 years of age and above in the 75th independence year of India.
In consideration of that, the government placed section 194P in the Income-Tax Act, 1961, which states conditions for income tax exemption for senior citizens and has applied since April 1st, 2021.
Conditions for income tax exemption for senior citizens:
- Income tax exemption for senior citizens is available only when their age is 75 years or above.
- They should have interest and pension income only. Interest income ensued from the same specified bank informed by the government in which they are availing pension.
- Specified banks will be accountable for the TDS(Tax Deducted at Source) deduction of senior citizens after following the deductions mentioned in the rebate under 87A and Chapter VI-A.
- Senior citizens must be "Residents" in the preceding year.
- Also, the senior citizen should provide a declaration to the specified bank, which you will get to know further.
- After the specified bank deducts income tax returns for senior residents 75 years of age or above, there is no need to provide income tax return filing.
How to evaluate taxable income under the new section?
Primarily, a senior citizen must provide a declaration using form no. 12BBA. During the submission of the declaration, the bank will ask the senior citizens for proof of tax exemptions and deductions in case of the old income tax regime. If the senior citizen selects the new income tax regime, then submission of investment proofs is not needed.
Once the bank avails the declaration, the bank will evaluate the gross total income+ and interest income. Additionally, the bank will consider the tax exemptions, deductions, and rebate u/s 87A that a senior citizen is entitled to acquire at net taxable income. Then, the bank will deduct TDS for senior citizens after accounting rebates and deductions.
Conclusion
After the specified bank deducts TDS as stated in section 194P, the provisions of section 139, i.e., income tax filing, will not be valid to a senior citizen who have 75 years of age and above. This factor indicates that the senior citizen need not do income tax return filing.
Thus, a senior citizen should complete a declaration through form 12BBA and append all the abovementioned documents.
If you do not know how to fulfil the ITR filing for senior citizens, you must reach Lawgical India. Our team has incredible experts who will take care of your procedure for income tax exemption for senior citizens without any hassle. Contact us today.
