People above 75 years with only pension and interest income, exempt from income tax

Finance Minister Nirmala Sitharaman on Monday announced that senior citizens over 75 years who have only pension and interest income would not need to file tax returns. “We shall reduce the compliance burden on our senior citizens who are 75 years of age and above – for senior citizens who only have pension & interest income, I propose exemption from filing their Income Tax return,” the Finance Minister said while presenting the Budget in the Parliament.

The move came in the midst of an economic slowdown induced by the ongoing COVID-19 pandemic. Tax proposals are play a balancing role between encouraging consumption for economic revival and India’s peaking fiscal deficit.

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In last year’s Budget, Sitharaman had introduced a new tax regime, with an option for the individuals to choose between the old or new system. The new system was a simplified one where one would not be able to add deductions like medical, conveyance etc. Those earning up to Rs 2.5 lakh would be required to pay zero tax, according to this new regime. Those with an income of Rs 2.5 lakh to Rs 5 lakh would be taxed at 5%; 10% for income between Rs 5 lakh and Rs 7.5 lakh. Those with income between Rs 7.5 lakh and Rs 10 lakh would be taxed at 15%.

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There is a 20% tax for income between Rs 10 lakh and Rs 12.5 lakh, and 25% for income between Rs 12.5 lakh and Rs 15 lakh. Income above Rs 15 lakh are taxed at the rate of 30%.