Senior citizens must disclose all form of income in ITR 

Review Form 26AS and Annual Information Statement to see if you are eligible for refund of TDS

Indian tax laws offer a number of benefits to senior citizens who should be aware of them at the time of making tax-savings investments and filling their Income Tax Return (ITRs). They should avoid a few common mistakes while carrying out the latter task.

Who is a senior citizen?

These are two categories for tax purpose: senior citizens and super senior citizens. “Resident individuals aged 60 years or more (but below 80 years) during the year are classified as ‘senior citizens’, while resident individuals aged 80 years or more during the year are classified as ‘super senior citizens’, The basic exemption limit is 3 lakh for senior citizens.

Report all forms of income

Many senior citizens fail to disclose certain incomes like interest commissions, or dividends in their ITRs.

“Report all types of income in the ITR, regardless of the amount or whether tax has been deducted from it. Non-disclosure of income will be considered as under-reporting. It could also result in penalties and scrutiny by the tax department “

Claim sections 80TTB, 80C deduction

Resident senior citizens can claim an enhanced deduction of up to Rs 50,000/- under Sections 80TTB of the I-T Act against interest earned on fixed deposits, savings accounts of commercial banks, cooperative banks, and post offices.

“Those who have invested in Senior Citizens Savings Scheme should avail of Section should avail of Section 80C deduction”

Income from properties

Sometimes, children of senior citizens pay rent to their parents and claim house rent allowance (HRA). Such parents should include the rent they receive in their ITRs.

A senior citizen who owns more than two residential properties may consider two as self-occupied and treat the rest as ‘deemed let-out’. “Senior citizens must compute the notional income on such deemed let out property. This income will be subject to taxation under the head ‘income from house property’ in their ITRs.”

Exemption from filling ITR

Filling an ITR is not mandatory for senior citizens who only have income from bank deposits, which is below the basic exemption limit. But they must file an ITR if they qualify for tax refund.

Many seniors assume they don’t need to file return if tax has been deducted at source (TDS) from their income receipts. Exemption from return filing is subject to several conditions: the senior citizen should be 75 or above; he should be a ‘resident’ in the relevant financial year; he should have pension and interest income only; and his interest income should accrue from the same specified bank in which he receives his pension.

Standard deduction on pension income

A standard deduction of up to RS 50,000/- can be claimed against salary and pension income under Section 16 (ia) of the I-T Act. Effective from FY 2022-23, pensioners opting for the new tax regime can also claim this standard deduction.

Claim TDS refund

Senior citizens need to heed a few points while filing their ITRs. “A very senior citizen aged 80 year or more filing ITR in Form SAHAJ (ITR-1) or SUGAM (ITR-4) and having a total income of more than Rs 5 lakh, or having a refund claim, can file ITR in paper mode, i.e., electronic filing is not mandatory.”

Senior citizens aged 60 years or more don’t need to pay advance tax if they don’t have income under the head, “Profit or gain from business or profession”.

Before filing their ITRs, senior citizens must review Form 26AS and the Annual Information Statement to check if any TDS has been deducted on their income. If their income is below the taxable limit, they will be eligible for a refund of this amount.

“Even if capital assets are sold and the entire gains reinvested, they must report their capital gains in the ITR. This will allow them to claim refund of the TDS deducted on sale of property”.

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