'Half-Hearted Approach': Senior Citizens Above 75 Years Exempted From ITR Filing

On February 1, Finance Minister Nirmala Sitharaman announced the Union Budget for 2021-22. It was labelled as a ‘safe’ budget in context of the ongoing pandemic because nothing startling came out of it. However, FM decided to please the senior citizens by announcing a special exemption for the pension class.

In her Budget speech, Nirmala Sitharaman said, “In the 75th year of independence of our country, we shall reduce compliance burden on senior citizens. For senior citizens who only have pension and interest income, I propose exemption of filing of income tax returns. Senior citizens above 75 years of age with only interest income will not have to file income tax returns.”

Tax slab for senior citizens (aged between 60-80 years) till now:

Income up to ₹3 lakh – Nil.

Income between ₹3 – ₹5 lakhs- 5%

Income between ₹5 – ₹10 lakhs- 20% of total income exceeding ₹5 lakh+ ₹10,000

Income above ₹10 lakh – 30% of total income exceeding ₹10 lakh + ₹1,10,000

Following the latest announcement on ITR filing exemption, Money9 spoke to SK Sethi, senior citizen and an insurance expert, to get a first hand impression of how this decision will impact the life of pensioners in India.

“Frankly speaking even though people have been talking about such a wish in last few years, I did not expect this to be announced in 2021,” Sethi said.

Sethi welcomed the decision, however, he termed it ‘half-hearted approach’. “It is a good decision but I will say it may turn out to be a half hearted approach as senior citizens, who have rental income will still have to file tax returns. This decision will make life easier for those who have either pension or bank interest income or both . But not for others,” he exclaimed.

Senior citizens who receive income from rental, dividend income, capital gains /losses will have to file their ITR as per law. But, in order to make the process easier, the government also announced reduction in time period for reopening of income tax assessment cases to three years. The initial time period was six years.

“Since, I have additional rental income as well, I don’t qualify for relief announced in the Budget 2021. This is a half baked budget. Govt. proposes to nominate few stand-alone banks where this scheme would be rolled out. The 75+ beneficiaries of the proposal would be required to give a declaration on certain points (yet to formulated by the Finance Ministry). The nominated banks would assess incomes of these individuals. A long rigmarole! People might as well file their IT returns instead,” Anand Kumar Malhotra, another senior citizen, said.

The world is going through a medical emergency due to the ongoing covid-19 pandemic. It has been a very challenging year for the elderly both in terms of health and finances. The interest rates on fixed deposits were lowered during the lockdown which severely impacted the income of senior citizens. They are finding erosion of their savings corpus.

“Retired persons are undergoing a great degree of stress due to interest rates which have gone down over last many years . Stock market or Sensex is going up but I will not suggest senior citizens of 70+ to invest in stock market . Banks give 0.5% extra interest to senior citizens. Inflation is affecting the people . Medical costs including frequent doctor consultation , diagnostic tests , medicines are a big burden on all senior citizens. Large population was expecting that  an announcement will come in the budget that insurers will take the responsibility of paying for vaccine under Health Insurance policy . Yes ,it will cost  a small amount but will keep future claims from policy holders under control .It would speed up the vaccination process and will share part of the burden of the Finance Ministry and pressure on Government hospitals,” Sethi explained

The mental health of senior citizens also hit a roadblock during the lockdown. “Pandemic resulted in ‘work from home’ situation .No travel and no outside food helped in lowering the expenses to some degree. But staying at home has resulted in a degree of isolation as we could not meet customers , clients, friends or relatives. My elder sister was admitted into Ganga Ram Hospital for 6 months due to terminal illness. You will be surprised to know I could not even visit her in the hospital because of pandemic fear and precautions suggested for senior citizens,” he asserted further.

Sethi and many in his age bracket now demand for mandatory health insurance for senior citizens.

“Time has come when the government should consider mandatory health insurance for senior citizens . My suggestion is that 50% subsidy should be given by the government for first 2 years. Offer should be given to everyone above 60 years of age to join the scheme during first 2 years. Assuming ₹12,000 per year is the premium, it will result in an insurance premium of ₹72,000 crores which is much bigger than the present health insurance premium (comprising all age groups and group health) in the country,” he said.

For 75+ senior citizens, the good news is – they need not indulge in a robust process of ITR filing anymore. For the rest, the wish list keeps getting longer.