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Finance Minister Nirmala Sitharaman announced this new relaxation during the Union Budget 2020-21.
Budget 2021 proposes adding a new section that exempts senior individuals over the age of 75 from filing income tax returns.
Income Tax Return New Rule: Senior citizens over 75 years old with solely pension and interest as a source of income will be excluded from filing income tax returns (ITR) for the fiscal year 2021-22. The Central Board of Direct Taxes (CBDT) has issued guidelines and declaration papers that older residents must submit to the designated bank. Banks would deduct tax on pension and interest payments and deposit the money with the government.
Finance Minister Nirmala Sitharaman announced the new relaxation during the Union Budget 2021. "In the 75th year of the Independence of our country, the government should reduce the compliance burden on senior citizens who are 75 years of age and above," she said.
"For senior citizens who only have pension and interest income, I propose an exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income," the finance minister further added.
Budget 2021 proposes to include a new section to allow older individuals over the age of 75 to be exempt from reporting ITRs if the following conditions are met:
(i) The senior citizen must have lived in India for the preceding year and be 75 years old or older.
(ii) An older citizen with a pension but no other source of income. He or she may, however, get interest from the same bank as he or she receives his or her pension income.
(iii) This bank is a defined bank (iii). The federal government will designate a few banks, all of which are banking companies, as the designated banks in Budget 2021.
(iv) He or she is required to make a declaration to the designated bank. Such particulars, in such form, and confirmed in such a way as may be stipulated in the statement
It is important to note that senior individuals over the age of 75 are not excused from paying tax, but merely from filing an income tax return (ITR) if they meet certain criteria. Only if the interest income is produced in the same bank where the pension is lodged would the exemption from filing income tax returns be available.
"The bank will deduct the income tax which he has to pay and deposit it with the government. The condition is that the person should have only pension income and interest from fixed deposits should accrue in the same bank," finance secretary Ajay Bhushan Pandey had earlier said.
In light of the Covid-19 crisis, the deadline for filing income tax returns (ITR) for the fiscal year 2020-21 has been extended to September 30. The income tax department launched a new e-filing system, in June to make tax filing more convenient. However, in recent months, several users have expressed dissatisfaction with the site's performance. Because of the hardships suffered by ordinary people, the finance ministry "summoned" Infosys CEO Salil Parekh to explain the situation. The government has given the IT behemoth till September 15 to rectify the problems.