Relief To Senior Citizen From Filing Income Tax Return


Hon’ble FM Smt. Nirmala Sitaraman proposed in Budget 2021 that certain classes of Senior citizens who fulfill following conditions are not required to file return of income u/s 139(1). In place of Senior Citizens, banks are required to deduct TDS u/s 194P of Income-tax Act, 1961 and deposit tax into account of Govt.

Conditions for Relaxations in filling of Income Tax Return for Senior Citizens:-
  1. He is of 75 years or more during the year.
  2. He is Resident in India.
  3. He has only pension income and can derive bank interest from same bank in which pension is received. Therefore if he receives bank interest from any other bank then he cannot enjoy this relaxation.
  4. The pension received should be received in banks as specified by Govt.
  5. He is required to furnish declaration to specified bank.
Banks Are Liable to Deduct TDS Under Section 194P:-

When declaration is furnished, banks will compute income of Senior Citizen after deductions under Chapter VI-A i.e LIC premium, PPF, Mediclaim, deduction on specified diseases u/s 80DDB,etc. and rebate allowable u/s 87A and deduct tax on the basis of rate in force i.e. normal income tax slab rate.  Once this is done, there will not be any requirement of furnishing return of income by such Senior Citizen. The provisions of Section 194P will be made effective from 01/04/2021.

Instances When Relaxation Cannot Be Claimed by Senior Citizens:-

  1. When he is Non-Resident
  2. When he has income from any other source other than pension.
  3. When he has interest income from any other bank other than bank in which pension is received.
  4. When he does receives pension from specified banks.
No Relief on Tax Payment to Senior Citizens:-

Govt. has only given relaxation in filing returns of income on fulfilling certain conditions. It has not given relief on payment of taxes. The liability to pay taxes has been shifted to banks.

Other Tax Benefits to Senior Citizens:-
  1. Increased Tax Exemption Limit- For Senior Citizens of 60-80 years-Rs.3,00,000/- and for Super Senior Citizens of above 80 years-Rs.5,00,000/-.
  2. Interest from bank is not chargeable upto 50000/- u/s 80TTA.
  3. Deduction of Rs.1 lakhs u/s 80DDB on treatment of severe disease.
  4. Standard deduction of Rs.50000/- on pension income.
  5. Deduction of Rs.50000/- on health insurance premium paid u/s 80D.
  6. Exemption from paying advance tax if they do not have business or professional income.
  7. Super Senior Citizens can physically file ITR-1 (Sahaj) and ITR-4 (Sugam)
  8. Aadhar Linking with PAN is not mandatory for Super Senior Citizens.