Budget 2021 for Senior Citizens: Finance Minister Nirmala Sitharaman, while presenting the Budget 2021, has proposed no filing of Income Tax Return (ITR) by senior citizens who are above 75 years of age and have only pension and interest income. Pension from the ex-employer is taxed under the income tax head of Salary while family pension is taxed as ‘income from other sources’. Interest income received from SCSS, bank fixed deposit etc is taxed as per one’s income slab under the head ‘income from other sources’.
The bank, however, will deduct the necessary tax before paying to them. It is important to note that they have not been exempted from paying tax but only from filing ITR provided the eligibility is there.
For those less than 60 years of age, income up to Rs 2.5 lakh in a financial year is tax-exempt and they are not required to file ITR. For those who are 60 years or above but less than 80 years, the limit is Rs 3 lakh, while for those who are 80 years or more, the exemption limit is Rs 5 lakh and they are also not required to file ITR.
On income between Rs 3 lakh and Rs 5 lakh, the income tax rate is 5 per cent, while on income between Rs 5 lakh and Rs 10 lakh, the income tax rate is 20 per cent, and on income above Rs 10 lakh, the tax rate is 30 per cent.
For senior citizens who are 80 years or above, on income between Rs 5 lakh and Rs 10 lakh, the income tax rate is 20 per cent, while on income above Rs 10 lakh, the tax rate is 30 per cent.
The proposal not to file ITR by senior citizens who are above 75 years of age and have only pension and interest income will come as a relief to the taxpayers.
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