Economy

‘Seniors over 75 with multiple accounts still need to file ITRs’

Shishir Sinha New Delhi | Updated on February 02, 2021 Published on February 02, 2021

Finance Secretary, Ajay Bhushan Pandey (File Photo)   -  Businessline

Those seeking refunds will also need to file returns, says Revenue Secy

Senior citizens over 75 with multiple bank accounts will not get any exemption from filing Income-Tax returns. Also, those who want refund will need to file returns, Finance Secretary Ajay Bhushan Pandey, who is also the Revenue Secretary, said.

“We have tried to reduce the compliance burden of senior citizens as bank particular will calculate the interest and deposit with the government. If an individual has multiple accounts in different banks, then exemption will not apply. So, the whole idea is if at that age (75 years or more) one can manage multiple accounts in multiple banks, then one might as well file the returns,” Pandey told BusinessLine.

Finance Minister Nirmala Sitharaman in her Budget speech said, “For senior citizens who only have pension and interest income, I propose exempting them from filing income tax returns.”

On the issue of the need to file refund, Pandey said this will be limited to fewer people. “Ordinarily, there will be no need for any refund, because they have only pension and income from fixed deposit. Basically, we have to see that the people who are above 75 will have pension account as well as some fixed deposit in same bank,” he said.

EPF taxation

Pandey also tried to clear the air regarding tax on interest earned from Employees Provident Fund (EPF), if annual contribution is more than ₹2.5 lakh. “99 per cent of subscribers are contributing less than ₹2.5 lakh annually. In order to contribute ₹2.5 lakh, one should have annual income of more than ₹20 lakh. How many people have annual income of more than ₹20 lakh?” he questioned.

It was stated in the Budget that there have been instances of some employees contributing huge amounts to these funds and the entire interest accrued/received on such contributions is exempt from tax under clause (11) and clause (12) of section 10 of the Income Tax Act. This exemption, without any threshold, benefits only those who can contribute a large amount to these funds as their share.

“Accordingly, it is proposed to insert proviso to clause (11) and clause (12) of section 10 of the Act, providing that the provisions of these clauses shall not apply to the interest income accrued during the previous year in the account of the person to the extent it relates to the amount or the aggregate of amounts of contribution made by the person exceeding ₹2.50 lakh in a previous year in that fund, on or after April 1, 2021, computed in such manner as may be prescribed,” the Budget proposed. Pandey said, “There should be equity between those contributing more towards EPF and those contributing less. Whenever tax benefit is given, it is given from ordinary taxpayers’ money. Similarly, if you are giving assured return, again, it is taxpayers’ money being spent. Why should the taxpayers’ money be used to give assured returns for those contributing such high amount.”

Tax dispute resolution

Giving details about new dispute resolution mechanism, particularly for small and medium direct taxpayers, he said that it will have panel of experts who are retired judges and former tax officials.

There could be panel of 200-300 people and whenever application for dispute resolution is filed, the case will be allocated to two such experts, chosen randomly from the panel and whole exercise will be conducted in a faceless manner.

“The whole idea is that taxpayer should have confidence, particularly the small and medium taxpayers.If there is difference of opinion between taxpayers and departments, it will be mediated by two independent experts, so that a fair chance is given. It will be just like Lok Adalat or you can call Tax Adalat,” he said.

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Published on February 02, 2021
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