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Those aged 75 and above are exempted from filing IT returns, but subject to specific conditions. Pic: livemint.com
Many senior citizens mistakenly believe that Tax Deducted at Source (TDS) on their income automatically relieves them from the burden of filing income tax returns. However, this is not necessarily true.
Income tax exemption for seniors
Senior or super-senior citizen taxpayers must understand that TDS is an advance payment towards their tax liability. It may not cover their entire tax obligation, especially if their total income exceeds the exemption limit or specific deductions/exemptions have not been considered in the TDS calculation.
While Section 194P of the Income Tax Act provides an exemption from filing returns for senior citizens aged 75 years and above, this exemption is subject to specific conditions. The conditions are:
- The total income should not exceed ₹5 lakh and must be comprised solely of pension and interest income.
- The interest income must originate from the same bank through which they receive their pension.
- A declaration should be submitted to the bank to claim this exemption.
- The specified bank, as notified by the Central Government, must be designated. These banks are responsible for deducting TDS from senior citizens’ income after accounting for deductions under Chapter VI-A and rebates under Section 87A of the Act.
If these conditions are not met, senior citizens with TDS deducted may still be required to file a tax return.
ITR forms that suit seniors best
To help senior citizens access these benefits, the IT Department has introduced specialised income tax return (ITR) forms designed to streamline the filing process and ensure eligibility for income tax exemptions.
The ITR form for senior citizens depends on their sources of income. Here are some ITR forms:
- ITR-1 (Sahaj): This form is suitable for senior citizens whose income includes salary/pension, interest from savings accounts/fixed deposits, and rental income from a single residential property. The total income reported on this form must not exceed ₹50 lakh.
- ITR-2: If the senior citizen’s earnings include capital gains from the sale of shares, property, or other assets. This form accommodates a broader spectrum of income sources than ITR-1.
- ITR-3 or ITR-4 (Sugam): These ITR forms are best for senior citizens earning business income or professional income. If you earn income from a business or profession, you may need to file either of these forms, depending on the specifics of your business and whether you choose the presumptive taxation scheme. It’s advisable to seek advice from a tax consultant in this regard.
The ITR-3 form is designated for individuals who earn income from a business or profession, excluding income that falls under presumptive taxation. The ITR-4 form is intended for individuals who earn income from a business or profession that falls under presumptive taxation as per sections 44AD, 44ADA, etc.
Simplified tax filing for seniors
- Simplified ITR forms: Senior citizens with straightforward income sources may find that forms like ITR-1 or ITR-4 are more suitable. These forms are designed to be less complex and easier to navigate.
- Pre-filled information: The department automatically populates certain details in ITR forms using information obtained from banks and other sources. This streamlines the filing process for seniors, saving them time and effort.
- E-filing options: The Income Tax Department provides electronic filing options for ITRs, allowing tech-savvy seniors to conveniently file their returns from home. Alternatively, seniors unfamiliar with online filing can still opt for traditional methods such as paper filing or seeking assistance from a tax professional.
These options are aimed at simplifying the tax filing process for senior citizens and promoting their utilization of available tax benefits. If you’re a senior citizen unsure about which form to use or how to proceed with filing, seeking advice from a tax advisor can be highly beneficial.