To present aid to senior residents aged above 75 years, the federal government, in its Budget 2021, has proposed an exemption for them from submitting earnings tax returns (ITRs). However, this exemption is obtainable solely to those that fulfil sure circumstances and consultants really feel that it will restrict the variety of senior residents who can profit from this.
Only these senior residents who don’t have any earnings aside from pension earnings and curiosity earnings can avail of the benfit. The curiosity earnings ought to be from a checking account as might be specified by the federal government.
Also Read | Turnout modest for second covid shot
“The intention of bringing on this exemption is sweet, however it’s unlikely that many senior residents will meet the situation of not having any earnings aside from pension earnings. Generally, senior residents put money into devices comparable to small saving schemes like senior citizen saving schemes from which they earn curiosity which is absolutely taxable. They can also be getting a dividend or rental earnings,” mentioned Ameet Patel, accomplice, Manohar Chowdhry & Associates.
Also, the situation that the senior citizen ought to have a checking account with just one financial institution is unlikely to be met by many, he added.
There is not any bar on the quantity of pension a senior citizen could also be incomes. The exemption is simply from submitting tax returns. The senior citizen must pay tax as per the marginal slab charges. The specified banks will deduct the tax and submit it on behalf of the taxpayers.
The senior citizen must submit a declaration to the banks saying she or he does not have every other earnings aside from the pension and curiosity earnings. The financial institution will deduct the TDS after contemplating the deduction allowable beneath Chapter VI-A and rebate allowable beneath part 87A of the Act.
Experts really feel that the circumstances will restrict the profit to a restricted variety of senior residents.
“The authorities has mentioned will probably be out there to those that have pension accounts with banks as might be specified by the federal government. So, this will likely additionally limit many senior residents to avail off the profit as they could not have accounts with the required banks. The alternative of the financial institution usually is determined by the previous employer for retired folks. In many organisations they proceed with the wage account for crediting pension. In smaller organisations an individual might get the freedom to carry financial institution accounts of their alternative. Generally, larger organisations don’t give this liberty,” Prakash Hegde, a Bengaluru-based chartered accountant.
“The good thing about this can be out there to a handful of individuals due to the stringent circumstances like limiting the earnings to pension and curiosity from the identical financial institution as could also be notified by the federal government. It would have been higher if they’d have allowed it throughout all banks. People usually wish to diversify their deposits throughout banks as a danger management measure, due to this fact, it’s extremely unlikely that they won’t have an account with every other financial institution,” mentioned Gautam Nayak, a chartered accountant.
Subscribe to Mint Newsletters
* Enter a sound e-mail
* Thank you for subscribing to our e-newsletter.
