Those senior citizens above 75 years of age, who have only pension and interest income, need not file the income tax return (ITR), says Finance Minister Nirmala Sitharaman. The paying bank will deduct the necessary tax.
Presenting the National Budget 2021, Sitharaman said that under the proposal, those above the age of 75 will no longer have to file I-T returns. She said that income tax return forms have been further simplified. Under sectiob 80TTB, seniors can claim up to Rs 50,000 interest income received from banks and post offices as a deduction from their income thereby making this type of interest income for senior citizens effectively tax exempt up to Rs 50,000.
Earlier, senior citizens were entitled to similar tax-exemption for interest income from bank and post office savings accounts but only up to Rs 10,000 under section 80TTA. The Rs 50,000 deduction was the biggest tax relief announced in Budget 2018 for most senior citizens as they earn most of their income through interest from bank FDs and post office schemes. TDS limit for bank fixed deposit interest was also hiked simultaneously for senior citizens.
Furthermore, if a senior citizen does not have a medical insurance policy and has incurred medical expenditure during the financial year, then also he or she can claim deduction of up to Rs 50,000 for such expenses under section 80D of the Income Tax Act. Earlier, a deduction for medical expenditure up to Rs 30,000 was allowed for super senior citizens aged 80 years, and above if they were not covered by any medical insurance policy.
The Finance Minister said income tax assessment could earlier be reopened up to six years. The time limit has now been reduced to three years. “In serious tax evasion cases as well, only where Rs 50 lakh or more has been concealed, the assessment can be reopened up to 10 years and that too after the concent of Principal Chief Commissioner,” she said.
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The Finance Minister also announced an investor charter for investor protection across financial products. The deposit insurance scheme was increased to Rs 5 lakh from Rs 1 lakh last year. Sitharaman said that the provision will be streamlined so that troubled bank depositors can get access to their deposits to the extent of their deposits.