Every Indian citizen with total income exceeding the exempted income limit has to file a tax return. But in the case of senior citizens, the Income tax-Act, 1961 provides some relief in amount of tax as well as in filing of the income tax return. Some of these benefits include higher basic exemption limits, higher medical insurance premium deductions, higher deduction limits for interest from post office and banks, and not filing the return if they meet certain criteria.

SENIOR CITIZENS AND SUPER SENIOR CITIZENS

For income tax purpose, a person aged 60 years, but less than 80 years at any time during the financial year is considered a senior citizen, while a person aged 80 years and above is considered a super senior citizen.

Under the old tax regime, the basic exemption limit for senior citizens is Rs. 3 lakh, while for super senior citizens, it is Rs. 5 lakh. For all other taxpayers, it is Rs. 2.5 lakh.

But there are certain conditions under which senior and super senior citizens need not file income tax returns.

WHEN SENIORS AND SUPER SENIORS DO NOT HAVE TO PAY TAXES

From April 1, 2021 (assessment Year 2022-23), Section 194P of the Income-tax Act 1961, exempts senior citizens from filing their income tax return under certain conditions.

What are these conditions?   

• The senior citizen should be 75 years of age or more at any time during the financial year and should be a ‘Resident’ Indian under the Income-tax Act, 1961.

• They should have income only from pension and interest, and their interest income should come only from the same bank account in which they receive their pension.

• The senior citizens are required to submit a declaration to the specified bank to avail of Section 194P benefits of not filing their income tax return.

• In this case, such a bank, as notified by the Centre as a ‘specified bank’, shall be responsible for computing the total income of such seniors’ and deduct tax at source (TDS) after allowing applicable deductions under Chapter VI-A and rebate under section 87A of the Income-tax Act, 1961. The Centre, through a notification dated September 2, 2021, notified that the specified bank means a scheduled bank appointed by the Reserve Bank of India as an agent under Section 45 of the Reserve Bank of India Act, 1934 (2 of 1934).

• Once the specified bank deducts the taxes, the seniors are not required to file their income tax return.

• Senior citizens are required to provide proof of deductions and rebates to the bank if they opt for the old tax regime, but in case of selecting the new tax regime, they are not required to submit any investment proof.

SOME POINTS TO NOTE

The higher basic exemption limit that senior citizens get in the old income tax regime is not applicable in the new tax regime. This is why they are not required to provide any investment proof. The rebate under Section 87A is, however, applicable in both the tax regimes. The surcharge and health and education cess are also the same in both the tax regimes.