ITR filing for Retired person
Learn everything about ITR filing for Retired person such as taxability, tax rate, choosing ITR form, tax rates, due date, penalty, how to file ITR. Contact us for filing!
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Filing Income Tax Returns (ITR) is an important annual task for everyone, including retired individuals in India. Despite retirement, many senior citizens continue to have various sources of income such as pensions, interest from savings, investments, and rental properties. Ensuring that ITR is filed correctly and on time not only helps in avoiding legal complications but also secures financial benefits such as refunds for excess TDS deductions. This guide aims to simplify the ITR filing process for retired persons, providing clear steps, taxability, tax rates, how to choose ITR form, Due date and penalties for not filing ITR for Retired person.
Taxability for Retired Persons or Pensioners
Retired individuals often have income from various sources such as pensions, savings, investments, and rental properties. Understanding these sources is the first step in filing accurate income tax returns.
- Uncommuted pensions (received monthly) are taxed under the head “Income from Salary”
- Commuted pension (received as lump sum) of government employees is completely tax exempted.
- Commuted pension of non-government employees is partially tax exempted subject to their gratuity, as: If gratuity is received – 1/3 of the total pension received is tax exempt and the remaining is taxed as salary and If gratuity is not received – 1/2 of the total pension received is tax exempt.
- Interest Income: Earnings from fixed deposits, savings accounts, and bonds are taxable under “Income from Other sources”
- Rental Income: Earnings from property rentals are taxable under “Income from House property”
- Capital Gains: Profits from the sale of assets like shares or real estate are taxable under Income from “Capital Gains”
Income tax slab for Retired person between 60 & 80 years (Old Regime)
| Income | Tax rates |
| Less than Rs.3,00,000 | 0% |
| Rs.3,00,001 – Rs.5,00,000 | 5% |
| Rs.5,00,001 – Rs.10,00,000 | 20% |
| More than Rs.10,00,000 | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
In Old tax regime, a maximum tax rebate of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs.
Income tax slab for Retired person for all age groups (New Regime)
| Income | Tax rates |
| Less than Rs.3,00,000 | 0% |
| Rs.3,00,001 – Rs.6,00,000 | 5% |
| Rs.6,00,001 – Rs.9,00,000 | 10% |
| Rs.900,001 – Rs.12,00,000 | 15% |
| Rs.12,00,001 – Rs.15,00,000 | 20% |
| More than Rs.15,00,000 | 30% |
You cannot claim any deduction under Section 80C, 80D, 80G, etc
In New tax regime, a maximum tax rebate of Rs. 25,000 is available for income upto Rs. 7 lakhs meaning your income is totally tax free till Rs. 7 lakhs.
Income tax deduction under Old regime for Retired person or Pensioner
Retired individuals in India can benefit from various tax deductions to reduce their taxable income. Here are the key deductions applicable to retired persons:
1. Section 80C:
- Maximum Deduction: Up to Rs. 1.5 lakh per annum.
- Eligible Investments/Payments:
- Life insurance premiums
- Employee Provident Fund (EPF) and Public Provident Fund (PPF)
- National Savings Certificates (NSC)
- 5-year fixed deposits with banks and post offices
- Senior Citizens Savings Scheme (SCSS)
- Principal repayment of home loan
2. Section 80D:
- Maximum Deduction: Up to Rs. 50,000 per annum for senior citizens.
- Eligible Payments:
- Health insurance premiums
- Medical expenditure for senior citizens (if no health insurance policy is held)
3. Section 80TTB:
- Maximum Deduction: Up to Rs. 50,000 per annum.
- Eligible Income:
- Interest from savings accounts, fixed deposits, recurring deposits, and post office savings accounts.
4. Section 80TTA:
- Maximum Deduction: Up to Rs. 10,000 per annum.
- Eligible Income:
- Interest from savings accounts (this is applicable if 80TTB is not claimed).
5. Standard Deduction for Pensioners:
- Amount: Rs. 50,000 per annum.
- This deduction is available for pension income, which is treated as salary income for tax purposes.
6. Section 80DDB:
- Maximum Deduction: Up to Rs. 1 lakh for senior citizens.
- Eligible Expenditure:
- Medical treatment for specified diseases such as cancer, neurological diseases, chronic renal failure, etc.
7. Section 80G:
- Maximum Deduction: Varies based on the donation.
- Eligible Donations:
- Donations to specified relief funds and charitable institutions.
8. Section 24(b):
- Maximum Deduction: Up to Rs. 2 lakh per annum.
- Eligible Expenditure:
- Interest on home loan for a self-occupied property.
9. Reverse Mortgage:
- The amount received under a reverse mortgage scheme is not considered income and is, therefore, not taxable.
10. Section 80CCD(1B):
- Maximum Deduction: Up to Rs. 50,000 per annum.
- Eligible Contributions:
- Contributions to the National Pension System (NPS).
Which ITR form is applicable for Retired person or Pensioner?
The applicable Income Tax Return (ITR) form for a retired person in India depends on the sources and nature of their income. Here are the most commonly applicable forms:
ITR-1:
- Applicable for individuals who have income from salary/pension, one house property, and other sources (excluding lottery winnings and capital gains).
- Total income should not exceed Rs. 50 lakh.
- Suitable for most retired individuals with straightforward income sources.
ITR-2:
- Applicable for individuals with income from more than one house property, capital gains, foreign assets/income, salary/pension or agricultural income exceeding Rs. 5,000.
- Also suitable for individuals whose income includes director in a company or investment in unlisted equity shares.
- Suitable for retired persons with more complex income sources such as multiple properties, capital gains from investments, etc.
Summary
- ITR-1: For retired individuals with income from pension, one house property, and other sources (excluding capital gains), and total income up to Rs. 50 lakh.
- ITR-2: For retired individuals with income from pension, multiple properties, capital gains, or foreign assets, and other specific conditions.
Choosing the correct form is crucial for accurate income tax return filing. If there are any doubts, consulting a tax professional is advisable.
What documents are required for ITR filing for Retired person or Pensioner?
- PAN Card
- Aadhaar Card
- Form 16 (Pension) or Pension Payment Order (PPO)
- Bank statements and interest certificates
- Details of rental income, if applicable
- Details of Capital Gains related to the sale of property, shares, mutual funds, gold, and other assets. This includes sale deeds, broker statements, and transaction receipts
- Investment proof under section 80C or proof of any other deduction
- Form 26AS and AIS
- Other relevant documents depending on income sources
Step-by-Step Guide for ITR filing for Retired person or Pensioners
Registering on the Income Tax E-Filing Portal
Visit the official Income Tax Department e-filing website at www.incometaxindiaefiling.gov.in. If you are a first-time user, click on ‘Register Yourself’, select the ‘Individual’ category, and enter your PAN, which will serve as your User ID. Provide your basic details, contact information, and create a password to complete the registration process.
Choosing the Correct ITR Form (ITR-1 or ITR-2)
Determine the appropriate ITR form based on your income sources. ITR-1 is for individuals with income from pension, one house property and other sources but not from capital gains and business or profession. ITR-2 is used for individuals with income from salary, multiple properties, capital gains, and other sources but not from business or profession.
Filling Out Personal Details and Income Information
Select the appropriate assessment year for which you are filing the return. Enter your income details under the relevant heads:
- Salary Income
- Income from Other Sources
- Business Income
- House Property Income
- Capital Gains
Claiming Deductions and Exemptions
- Deductions under Section 80C: Include eligible deductions such as life insurance premiums, PPF, NSC, and tuition fees.
- Deductions under Section 80D: Enter premiums paid for health insurance.
- Other Deductions: Claim deductions under other sections like 80E for education loan interest and 80G for donations.
Verifying and Submitting the Return
Click on ‘Compute Tax’ to calculate your tax liability or refund. If there is any tax payable, pay it through the e-filing portal using net banking or other available options. Preview the completed ITR form, ensure all details are correct, and click ‘Submit’. After submission, verify your ITR within 30 days. You can e-verify using methods such as Aadhaar OTP, net banking, or a digital signature. Alternatively, you can send a physical signed copy of ITR-V to the Centralized Processing Center (CPC).
What is the Last date of ITR filing for Retired person?
In case you have missed this deadline then you can file belated ITR till 31st December with late fees.
Also for any mistake made while filing ITR, you can make corrections by filing Revised ITR any number of times till 31st December.
If you miss deadline of Belated income tax return filing then you can file Updated ITR till 2 years from the end of relevant assessment year with late fees and additional taxes.
What are the Consequences of non-payment of Tax and non-filing of ITR by Retired person or pensioner?
Non-payment of tax and non-filing of Income Tax Returns (ITR) by an retired person can lead to several consequences under the Income Tax Act in India. These include financial penalties, interest charges, and potential legal action. Here’s a detailed look at the repercussions:
Consequences of Non-Payment of Tax
Interest on Unpaid Tax (Section 234A, 234B, and 234C):
- Section 234A: Interest is charged at 1% per month or part of the month for delay in filing the return beyond the due date, on the tax amount remaining unpaid.
- Section 234B: Interest is charged at 1% per month or part of the month for non-payment or short payment of advance tax. This applies if advance tax paid is less than 90% of the assessed tax.
- Section 234C: Interest is charged for deferment of advance tax, calculated at 1% per month for a shortfall in installment payments.
Penalties for Non-Payment:
- Penalty under Section 221: The Assessing Officer may levy a penalty up to the amount of tax due if tax is not paid within the specified time.
- Unreported income is considered illegal, tantamount to tax evasion, which may result in a penalty ranging from 100% to 300% of the evaded tax under Section 271(C).
- A penalty of 10% to 90% of the undisclosed amount may be imposed under Section 271AAB, depending on the circumstances
Consequences of Non-Filing of ITR
Late Filing Fee (Section 234F):
- A late fee of up to ₹5,000 if the return is filed after the due date but before December 31 of the assessment year.
- A late fee of ₹10,000 if the return is filed after December 31. However, if the total income does not exceed ₹5 lakhs, the maximum penalty is ₹1,000.
Penalty for Non-Filing (Section 271F):
- If an ITR is not filed by the end of the relevant assessment year, a penalty of ₹5,000 may be levied. However, this penalty provision is typically overridden by Section 234F as per recent amendments.
Prosecution (Section 276CC):
- For willful failure to file returns, the taxpayer may face prosecution. The term of imprisonment can range from three months to two years, and in cases where the tax evaded exceeds ₹25 lakhs, the imprisonment can be from six months to seven years.
Loss of Carry Forward Benefits:
- Losses under various heads of income (except for house property loss) cannot be carried forward to subsequent years if the return is not filed on or before the due date.
Increased Scrutiny and Audit:
- Non-filing or late filing of ITRs increases the chances of the taxpayer’s accounts being selected for scrutiny by the Income Tax Department, which can lead to a detailed audit and additional compliance requirements.
Conclusion
Filing ITR might seem complicated, but with the right information and preparation, retired persons can file their ITR accurately and on time. Remember to keep all necessary documents handy, choose the correct ITR form, and stay updated with the latest tax laws to make the process smoother.
In case you still have any query or want to file ITR with CA assisstance then you can contact us at +91 9769647582
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