Senior Citizen Tax Benefits as per Union Budget, 2021
The Union Budget
The Union Budget is the most awaited annual Government event, since it sets the tone for future economic growth. The Union Budget usually offers a range of benefits, as well as newer regulations pertaining to all the citizens and industries across domains.
Salaried professionals as well as senior citizens look forward to the revised proposals of the Union Budget, since it affects their tax liabilities, as well as, several other facets of their financial lives.
Changes in the Income Tax slabs are also announced in the Union Budget, which makes a huge difference to the common people. Taxpayers pay taxes based on the Income Tax slab they fall under. Hence, it is crucial to know your Income Tax slab and pay taxes in accordance.
The Government usually tries to offer additional benefits for senior citizens, and these benefits go a long way in reducing their tax liabilities. The Income Tax slab for 2021-2022 for senior citizens, however, remained unchanged over the previous year. Senior citizens are considered people between the ages of 60 to 80 years.
Senior citizens earning up to Rs 3 lakh are not required to pay taxes. Senior citizens earning between Rs 3 to Rs 5 lakh are liable to pay taxes at 5% of their total income. Those earning income between Rs 5 lakh to Rs 10 lakh are required to pay Rs 10,000 and up to 20% of their total income as tax. Senior citizens earning an income above Rs 10 lakh are required to pay Rs 1,10,000 and 30% of their total income as taxes.
The Government, in the Union Budget, 2021-2022, has offered several benefits for senior citizens. Read on to learn more about the Income Tax benefits senior citizens are eligible for owing to provisions in the Union Budget, 2021-2022.
- No taxation for senior citizens with only pension and interest income
This provision exists only for those senior citizens who are aged above 75 years. In a bid to reduce the tax compliance burden on senior citizens aged above 75 years, those who earn only through a monthly pension or through interest income, do not have to file Income Tax returns. This measure will offer a significant relief to those senior citizens with limited income.
- Period for reopening Income Tax assessment cases reduced
Aimed at reducing the incidences of tax harassment against the elderly, the Union Budget 2021-2022 includes, provisions for reducing the timeline up to which tax assessment cases can be reopened. Previously, the law allowed for reopening of Income Tax assessment cases to up to 6 years. In the latest Union Budget, this has been halved and reduced to up to 3 years. However, for cases where serious tax evasion has occurred for amounts up to Rs 50 lakh or more in a year, an assessment case can be reopened to up to 10 years.
- Rs 50,000 can be claimed as deduction under Section 80TTB
Section 80TTB was introduced in the Budget of 2018 under the Income Tax Act, 1961, mainly for offering benefits to senior citizens. In the Union Budget, 2021-2022, a newly introduced provision enables the senior citizens to claim tax deductions of up to Rs 50,000 on interest income received from banks or post offices.
- Introduction of Section 194P
The Union Budget of 2021-2022 saw the insertion of Section 194P to the Income Tax Act, 1961. Through this, banks are now required to deduct taxes for senior citizens who are aged above 75 years and earn an income only through their pension and interest income.
Retirement can often prove to be costly, due to lack of inflow in regular income. Additionally, the elderly often face health complications, which requires them to seek medical assistance far more frequently than their younger counterparts. With the rising costs of healthcare services and even products, such as medicine, senior citizens require all the help they can get towards keeping their expenses to a bare minimum.
In such a situation, the Government introducing provisions to reduce their tax liabilities is hugely beneficial for all the senior citizens and this remained unchanged even in the 2021-2022 Union Budget. The Union Budget, 2021-2022, aside from the benefits it has introduced for senior citizens, has been hailed as a document, which paints a positive picture for the growth of the Indian economy. For those who wish to increase their tax savings, the Union Budget of 2021-2022 has been a blessing
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