Income Tax for Pensioners 2021

When you get a certain amount of money as pension from your employer, that amount of money becomes your salary after retirement and therefore it becomes taxable according to the provisions of the Income Tax Act, 1961.

A pension is a monthly income that is paid out to retired individuals after they have retired from their place of employment. The payment modes for pensions differ based on the choice of the recipient. In some cases, former employees receive their pension in a lump-sum amount—commuted pension—or receive their pension on a monthly basis—uncommuted pension.

What are the Taxation Rules for Pensions? 

According to the rules of taxation, an uncommuted pension is viewed as a salary under the Income Tax Act, 1961, and is therefore taxable. However, Section 89(1) has a number of deductions on salary income that is provided to pensioners who receive their salary through nationalised banks. Similarly, banks make tax rebate adjustments under Section 88 and 88B when TDS is applied.

Tax Forms for Pensioners

The Indian government has 4 types of income tax forms that are relevant to individuals. Of these 4 forms, ITR 1 and ITR 2 are those that are applicable to pensioners.  

Income Tax for Pensioners in India
Tax for Pensioners

ITR-1 OR SAHAJ

The ITR-1 form is also known as the Sahaj Form and is applicable to individuals who receive an income of up to Rs.50 lakh from the following modes: 

  • Income from a salary  
  • Income from a pension 
  • Income from a house property 
  • Income from other sources  

ITR 2 Form

The ITR-2 form is applicable to individuals who are not eligible to file taxes under the requirements of the ITR-1 form. The ITR-2 form is applicable to individuals who receive income from the following modes: 

  • Income from a salary  
  • Income from a pension 
  • Income from a house property 
  • Income from other sources  
  • Income from capital gains 
  • Foreign income/assets 
  • Agricultural income above Rs.5,000 

New Income Tax Return Rule for 2021

During the union budget 2021, finance minister Nirmala Sitharaman announced that retired individuals above the age of 75 will be exempted from filing for income tax returns for the 2021-2022 fiscal year. This rule is applicable for senior citizens above the age of 75 who only have pension as their source of income.

It is also important to clarify that senior citizens over the age of 75 are not excluded from paying tax, but merely from filing an income tax return (ITR) if they meet certain criteria. Another important thing to keep in mind is that, senior citizens will be exempted from filing income tax returns only if the interest income is produced in the same bank where the pension is drawn.

Eligibility Criteria for ITR Exemption

Senior citizens will be able eligible for ITR exemption if they meet the below mentioned criteria:

  • Should be an Indian resident
  • Must be 75 years or older during fiscal year 2021-22
  • They should have the bank account with a specified bank as mentioned by the government.
  • The senior citizen must only have pension as their source of income. They should also have interest income from the same bank where they receive their pension. In short, the senior citizen should have only one bank account that they use for receiving pension.
  • The pensioner has to write a declaration to the specified bank. This declaration should include all the relevant information.

Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

reTH65gcmBgCJ7k
This Page is BLOCKED as it is using Iframes.