With Income Tax Exemption, the Indian government has announced a piece of uplifting news to Senior Citizens.
Prior to the Union Budget-2023, the government revised the income tax return rules for a specific category of senior citizens.
In a recent tweet, the Finance Ministry stated that senior citizens above the age of 75, who rely solely on bank pensions and interest as their source of income, are no longer required to file income tax returns.
This change is made possible by the introduction of a new section, Section 194-P, in the Income Tax Act of 1961.
The section has been applicable since April 2021, and banks have been duly informed about the amended rules.
Income Tax Exemption for Senior Citizens – Amendments
The Central Board of Direct Taxes has implemented this section and issued notifications regarding the related forms and conditions. Furthermore, essential amendments have been made in Rule 31, Rule 31A, Form 16, and 24Q.
Finance Minister Nirmala Sitharaman expressed her intentions to ease the tax compliance burden on senior citizens whose income is derived from pensions and interest.
She proposed exempting them from filing income tax returns, wherein the bank responsible for their accounts would deduct the applicable tax amount from their income.
Income Tax Exemption for Senior Citizens – Rates & Slabs
While salaried individuals and pensioners must file their income tax returns, the Budget 2021-22 introduced a new provision in the Income Tax Act, 1961, which gives Income Tax Exemption to senior citizens above the age of 75, subject to specific criteria.
Let’s explore the income tax slabs, rates, and exemptions applicable to senior citizens.
1. Income Tax Slab for Senior Citizens (60 to 80 Years)
2. Income Tax Slab for Senior Citizens Above 80 Years
Other Exemptions
1) Understanding Pension Taxation: Pension received by retired employees is considered taxable income under the “Salaries” category, exceeding the exemption limit.
2) Taxation of Gratuity and Provident Fund: Government employees receive tax-exempt amounts from the Employees’ Provident Fund (EPF).
Non-government employees can also enjoy tax exemption on EPF withdrawals if made after five years of continuous service, provided the EPF is from an EPFO-registered company.
For gratuity, it is tax-free for government employees, while non-government employees may qualify for tax exemption in specific situations.
3) Taxability of Family Pension: Family pension is considered taxable income under the category “Income from other sources.”
A deduction of up to 33.33% or Rs 15,000 (whichever is less) is available, and any remaining amount is subject to taxation.
