Income Tax return: Are senior citizens exempted from paying income taxes? Here's the real tax rule 

Is it true that senior citizens are no longer required to pay income tax after turning 75? A post circulating on social media platforms like WhatsApp suggests this is the case as India celebrates 75 years of Independence. However, the PIB Fact Check unit has debunked this claim, labeling it as 'fake'. 

The fake message read: “Central Government’s Big Announcement – These People Will Not Have to Pay Tax. The Modi government will not have to pay taxes to the country's senior citizens, because on the completion of 75 years of India’s independence, senior citizens above 75 years of age will no longer have to pay tax on their income. Senior citizens in India live on income from pensions and other schemer have to pay any tax on their income and they will not have to file income tax returns as senior citizens have been given exemptions in this.” 

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The message stated based on the update from the Central Board of Direct Taxes, a new law has been enacted to grant tax exemption to senior citizens. Notable modifications have been made to Rule 31, Rule 31A, Form 16, and Form 240. Senior citizens aged 75 years and above are required to fill out a 12-88A application at the bank in order to receive tax exemption. 

Terming the message as 'fake': PIB Fact Check posted on its social media X account: "A message circulating on social media claims that as India commemorates 75 years of its Independence, senior citizens above 75 years of age will no longer have to pay taxes."

Who does not have to file an income tax return?

According to Section 194P of the Income Tax Act, 1961, individuals aged 75 years and above are exempt from filing income tax returns under certain conditions. This provision will be effective from April 1, 2021.

What are the conditions?

The elderly individual resides in India and is aged 75 years or older in the preceding year. 

They receive pension income as their sole source of revenue, though they may also have interest income from the same bank where their pension funds are deposited. 

The said bank is recognized as a specified bank by the government. 

The individual must provide a declaration to the specified bank, detailing their financial situation. 

The senior citizen must provide a declaration to the designated bank. This declaration should include specific details, be in the prescribed form, and verified as per the specified requirements.

The designated bank, as notified by the Central Government, will be responsible for deducting TDS for senior citizens. This deduction will take into account deductions under Chapter VI-A and rebate under 87A.

Once the designated bank deducts tax for senior citizens aged 75 and above, these senior citizens will no longer be required to file income tax returns.

Which ITR form should senior citizens choose 

Senior citizens should select the appropriate Income Tax Return (ITR) form based on their income level when submitting their taxes. Individuals above 60 years old are considered senior citizens and are entitled to a basic exemption limit of Rs 3 lakh under the Income-Tax Act, 1961. 

On the other hand, super senior citizens, who are aged 80 and above, have a higher exemption limit of Rs 5 lakh. For taxpayers who choose the new tax regime under Section 115BAC of the Income-Tax Act, the basic exemption limit remains at Rs 3 lakh.

ITR forms and earnings

Pensioners with earnings less than Rs 50 lakh in the applicable financial year can choose to use Sahaj, or ITR-1, for their tax filing. 

Those with income from property, other sources, or capital gains are recommended to opt for ITR-2. 

Pensioners earning income from businesses or professions are advised to consider either ITR-3 or ITR-4 for their tax filing.

> ITR 1 pertains to senior citizens or super senior citizens whose income is derived from sources such as salary, pension, rental income, and other forms of income like interest.

> ITR 2 is applicable to individuals who, in addition to salary, pension, or rental income, also have capital gains from the sale of shares, property, etc.

> ITR 3 is meant for individuals with income from a business or profession, excluding income that is subject to presumptive taxation.

> ITR 4 is designed for individuals with income from a business or profession that is subject to presumptive taxation under sections 44AD, 44ADA, and similar provisions.