Budget 2021: FM Nirmala Sitharaman Announcement for Income Tax returns

FEB 1: Among several key announcements made by Union Finance Minister Nirmala Sitharaman in the Union Budget 2021-22, the senior citizens above 75 years with only pension income have now been exempted from filing the Income Tax returns.

Reading out the Union Budget 2021-22 through a ‘Made in India’ tab, Finance Minister Nirmala Sitharaman extended tax benefits to senior citizens, above the age of 75.

Under the proposal, senior citizens, depending only on pension, will no longer have to file the I-T returns now. FM Sitharaman said, “In the 75th year of Independence of our country, we shall reduce the compliance burden on senior citizens. For senior citizens who only have a pension and interest income, I propose exemption of filing of income tax returns.”

“We shall reduce the compliance burden for those 75 years and above. Senior citizens above 75 years of age with only interest income will not have to file income tax returns,” the Finance Minister said.

To reduce instances of tax harassments of the elderly, the government has also announced reducing the time frame for reopening of income-tax assessment cases from 6 years to 3 years. For reopening of serious tax evasion cases up to 10 years, the government has put in a monetary limit of cases involving over Rs 50 lakh in a year.

The tax slab until now for senior citizen aged 60-80 years:
Up to Rs 300,000 – Nil

Rs 3,00,001 to 5,00,000 – 5 per cent

Rs 5,00,001 to 10,00,000 – ₹10,000 + 20 per cent of total income exceeding Rs 5,00,000

Above Rs 10,00,000 – Rs 1,10,000 + 30 per cent of total income exceeding Rs 10,00,000

A senior citizen is an individual resident between the age of 60 to 80 years. A super senior citizen is an individual resident who is above 80 years. Most senior citizens rely on fixed-income investments but have been adversely hit by the pandemic. This happened as the preferred choice of investment for senior citizens has been bank fixed deposits (FDs) that offer a rate of interest of less than 6 per cent per annum across different tenure. But the drop in interest rates has hit the income of most senior citizens.

FM Sitharaman stated that the tax system should put a minimum burden on the taxpayers. A faceless dispute redressal platform to be set up for small taxpayers. Hence, a reduction of time in income tax proceedings is being proposed, while the time limit to reopen the assessment case proposed to be reduced to 3 years from the current 6 years limit.

“Tax audit limit increased from 5 crores to 10 crores,” the Finance Minister said.