Finance Minister Nirmala Sitharaman on Monday said senior citizens above 75 years of age with only pension income will now be exempted from filing income tax returns. The bank paying income to them will deduct the necessary tax from their bank account. This has come after Budget 2018 had announced tax law changes to provide more tax benefits to senior citizens. These included tax benefits such as the introduction of a new section 80TTB in the Income Tax Act, 1961, the deduction for medical expenditure in case of no health insurance coverage, etc.
Under section 80TTB, seniors can claim up to Rs 50,000 interest income received from banks and post offices as a deduction from their income thereby making this type of interest income for senior citizens effectively tax-exempt up to Rs 50,000.
Earlier, senior citizens were entitled to similar tax-exemption for interest income from bank and post office savings accounts but only up to Rs 10,000 under section 80TTA. The Rs 50,000 deduction was the biggest tax relief announced in Budget 2018 for most senior citizens as they earn most of their income through interest from bank FDs and post office schemes. TDS limit for bank fixed deposit interest was also hiked simultaneously for senior citizens.
The income tax return filers have also been increased to 6.48 crore in 2020 from 3.31 crore in 2014, the finance minister said.
Sitharaman presented the Union Budget 2021-22 on Monday, which was approved by the Union Cabinet headed by Prime Minister Narendra Modi earlier today.
Sitharaman, who had in her first budget in 2019 replaced leather briefcase that had been for decades used for carrying budget documents with a traditional red cloth 'bahi-khata', had earlier this month stated that the budget for the fiscal year beginning April will be "like never before".
It has to be a vision statement, a roadmap to get the world's fastest-growing major economy back on track.