As we know that the union budget comes into effect recently, Union budget of 2021-22 highlights that senior citizen above the age of 75 now need not file their Income Tax Return.
In the Union Budget 2021-22, senior citizens who are the age above 75 are exempted from filing income tax return of income subject to few conditions. The banks on the other side, is needed to deduct the requisite income tax from the bank account of such senior citizen. It should be noted such assesses are not exempted from paying income tax, they are only exempted from income tax return filing.
What are the conditions in which senior citizen can get exemption from ITR filing?
The benefit of exemption will only be available to citizen who are having following conditions:
1. The senior citizen is of the age of 75 or more during the previous year and resident in India;
2. He/she has pension income and no other source of income. In addition to such pension income he /she may have also have interest income from the same bank in which he is receiving his pension income;
3. This bank is a specified bank. The Govt. will be notifying some banks, which are banking company, to be the specified bank; and
4. He/she shall be needed to furnish a declaration to the specified bank. The declaration will be enduing such particulars, in such form and verified in such manner, as may be prescribed.
These amendments will come into effect from 01st April 2021.
What are the practical difficulties that may be faced while claiming such exemption?
There are several practical difficulties that a senior citizen can face while claiming exemption for income tax return filing. Senior citizen generally have Fixed Deposit/Recurring Deposit/saving bank interests as their major incomes. Interest rate for banks secede at times, so it is practically sparse for them to have such interest income from a single bank, or from the same bank from which they receive pension income. They may select to opt for investing in banks which endow high interest rate, or which provide high rates of interest to senior citizen.
Conditions say that to claim for exemption, government will specify banks. It means only those who are having pension accounts, plus having interest income from such specified banks will get advantage of the same.
What should taxpayers learn from this?
Having a look on the entire story and their condition, it will not as such help the senior citizens, considering the practical difficulties. They typically have more than one bank accounts, and even if they fulfil the condition of having income accounts in the same bank, what if the bank is not specified? Also, even after filing the declaration, if the bank by mistake deducts income tax at a higher rate or by whatsoever reasons, in that case also the senior citizen will have to file income tax return of income to claim refund. In this way, it have very limited advantages.