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Many seniors mistakenly believe they need not file returns if tax is deducted at source (TDS) on income received. This is incorrect.
The countdown to the July 31, 2024 deadline for filing income-tax returns (ITR) has begun.
Senior citizens should initiate the process early to file an error-free return.
Higher exemption limits
Senior citizens (60 to below 80) have a basic exemption limit of Rs 3 lakh. For super senior citizens (80 and above) the limit is Rs 5 lakh.
"For those who pay taxes under the new tax regime (Section 115BAC of the Income-Tax (I-T) Act, 1961), the basic exemption limit is Rs 3 lakh," says S R Patnaik, partner, Cyril Amarchand Mangaldas.
Report all incomes
Senior citizens often overlook reporting incomes like interest, commissions, or dividends in their ITRs.
All incomes, regardless of amount or tax deduction, must be disclosed. Failure to do so is deemed under-reporting and can lead to scrutiny and penalties by the tax department.
Avail of relevant tax deductions
Many senior citizens fail to claim the relevant tax deductions. Those investing in the Senior Citizens Savings Scheme should utilise the Section 80C deduction.
"Section 80TTB provides deductions up to Rs 50,000 for interest income earned by resident senior citizens from bank accounts," says Suresh Surana, founder, RSM India.
Those opting for the new tax regime cannot avail of these deductions.
Avail of Section 194P
Many seniors mistakenly believe they need not file returns if tax is deducted at source (TDS) on income received. This is incorrect.
Exemption under Section 194P applies only if the senior citizen is 75 or older, a 'resident' in the previous year, has only pension and interest income, and has submitted a declaration to their bank.
"It is the bank's duty to deduct the applicable taxes on senior citizens' behalf, removing the need for them to file returns," says Nandini Acharya, associate, TAS Law.
Those eligible for a tax refund must, however, file a return.
Claim Section 87A rebate
Many senior citizens wonder if Section 87A of the I-T Act, which offers a tax rebate to those with income below Rs 5 lakh (post deductions under Chapter VI-A), applies to them.
"It is available to all resident taxpayers, regardless of age or any category, and is valid for the assessment year 2024-2025, subject to new amended thresholds," says Ritika Nayyar, partner, Singhania & Co.
Surana informs that the amount of rebate is restricted to the amount of income tax or Rs 12,500 (Rs 25,000 in the new tax regime), whichever is lower.
According to Patnaik, if a senior citizen avails of the new tax regime and their income does not exceed Rs 7 lakh, they can avail a rebate on their entire tax liability.
Standard deduction on pension income
A standard deduction of up to Rs 50,000 is available against salary and pension income under Section 16(ia) of the I-T Act.
Include rental income
Senior citizen parents who receive rent from their children (the latter claim House Rent Allowance) must include it in their ITRs.
"Super senior citizens have the option to submit their ITR 1 or ITR 4 in offline/paper mode, in addition to the e-filing option," says Patnaik.
Before filing their ITRs, senior citizens must review Forms 26AS and AIS for TDS deductions. If their income is below the taxable limit, they should claim these deductions in their ITRs and receive a refund.
"Senior citizens should keep proof of deductions and provide these to their banks if Section 194P applies," says Patnaik.
Source: Cyril Amarchand Mangaldas
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Feature Presentation: Ashish Narsale/Rediff.com
