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Senior Citizen

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FM Clarified that Interest Rate will not be Reduce from 1 April 2021

FM Clarified that Interest Rate will not be Reduce from 1 April 2021

The Ministry of Finance has issued below office Memorandum on 31 March 2021 reducing small saving rates significantly from 1 April 2021.

However on 1 April 2021 the FM clarified on Twitter that Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn.

The Interest Rate from April 2021 are as below

The Following is in Tabular Form for ease of reference

InstrumentsRate of interest from 01.01.2021 to 31.03.2021Rate of interest from 01.04.2021 to 30.06.2021 OrderRate of interest from 01.04.2021 to 30.06.2021 as per FM TweetCompounding frequency
Savings Deposit4.03.54.0Annually
1 Year Time Deposit5.54.55.5Quarterly
2 Year Time Deposit5.55.05.5Quarterly
3 Year Time Deposit5.55.15.5Quarterly
5 Year Time Deposit6.75.86.7Quarterly
5 Year Recurring Deposit5.85.35.8Quarterly
Senior Citizen Savings Scheme7.46.57.4Quarterly paid
Monthly Income Account6.65.76.6Monthly paid
National Savings Certificate6.85.96.8Annually
Public Provident Fund Scheme7.16.47.1Annually
Kisan Vikas Patra6.9 (will mature in 113 months)6.2 (will mature in 124 months)6.9 (will mature in 113 months)Annually
Sukanya Samriddhi Account Scheme7.66.97.6Annually
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PPF, Senior Citizen Scheme and Small Saving Interest Rates slashed by Govt from 1 April 2021

PPF, Senior Citizen Scheme and Small Saving Interest Rates slashed by Govt from 1 April 2021

Update 01 April 2021 the Interest will remain as per last qtr of Jan 2021 to Mar 2021.

Click here to Read the update FM Clarified that Interest Rate will not be Reduce from 1 April 2020

The rates of interest on various Small Savings Schemes for the first quarter of financial year 2021-22 starting from 1st April, 2021 has significantly reduced and notified by Government

InstrumentsRate of interest from 01.01.2021 to 31.03.2021Rate of interest from 01.04.2021 to 30.06.2021Compounding frequency
Savings Deposit4.03.5Annually
1 Year Time Deposit5.54.5Quarterly
2 Year Time Deposit5.55.0Quarterly
3 Year Time Deposit5.55.1Quarterly
5 Year Time Deposit6.75.8Quarterly
5 Year Recurring Deposit5.85.3Quarterly
Senior Citizen Savings Scheme7.46.5Quarterly paid
Monthly Income Account6.65.7Monthly paid
National Savings Certificate6.85.9Annually
Public Provident Fund Scheme7.16.4Annually
Kisan Vikas Patra6.9 (will mature in 113 months)6.2 (will mature in 124 months)Annually
Sukanya Samriddhi Account Scheme7.66.9Annually

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Know all about Senior Citizen Saving Scheme

Know all about Senior Citizen Saving Scheme

In India majority of older persons face financial hardship in old age as most of them are not in a position to earn their livelihood. Their savings, if any, are not enough to meet their day to day, particularly the medical expenses. Older persons with good net-worth value are in search of good short-term financial planning to earn a good income from their finance. The Income Tax law provides various benefits to senior citizens in India with the view to mitigate their issues.

The Government has also provided with various savings schemes to boost the income of the senior citizens. One such scheme is the Senior Citizen Savings Scheme (SCSS).

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings scheme for senior citizens, which was launched in 2004. The primary objective of the scheme is to enable senior citizens to ensure a regular flow of income. As this scheme is solely a government-run scheme, so the interest rate and other conditions have been set keeping in mind the financial needs of retirees. Let us first understand who is considered as a senior citizen in India before we move forward.

Who is considered as a Senior Citizen in India?

According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is considered as a Super Senior Citizen in India?

A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.

Who is eligible to invest in the Senior Citizen Savings Scheme?

  • An individual must be a citizen of India. Non-residential Indians (NRIs) or a person of Indian origin (PIOs) are not eligible to avail this feature.
  • Hindu Undivided Family (HUFs) do not qualify for this scheme.
  • Any resident of India aged 60 years or above is eligible for this scheme.
  • However, there are few exceptions to the age bar:
  • Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks and amount should not exceed the amount of retirement benefits.
  • Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.

What is the minimum amount that can be deposited under this Scheme?

This scheme can be availed with a minimum lump sum deposit amount of Rs. 1000.

What is the maximum amount that can be deposited under this Scheme?

SCSS allows only one deposit in the account in multiple of Rs 1000 maximum up to Rs 15 lakh.

Where can the account under this Scheme be opened?

  • A SCSS Account can be opened in any post office or a public or private sector bank. The terms of the account remain same. Account can be transferred from one post office to another.
  • The Application form should be attached with KYC documents, age proof, ID proof, Address proof and cheque for deposit amount.
  • The SCSS application form requires you to provide some key information at the time of opening a Senior Citizen’s Savings Scheme account such as:
  • Applicant name and PAN
  • Name of the primary applicant’s father/mother/husband/wife
  • In the case of joint SCSS account with spouse, you have to mention the name, age, and address of your spouse
  • Cheque/demand draft amount and number (if applicable)
  • Nominee name, age, and address (If you wish to have more than one nominee, mention detail of individual share of each nominee)
  • Account can be opened by cash for the amount below Rs 1 lakh and for Rs 1 lakh and above by cheque only.
  • In case of cheque, the date of realization of cheque in Government account shall be date of opening of account.

Where can one obtain the SCSS Application form?

  • Senior Citizen’s Application Form is available via the offline route at India Post Offices as well as via the online route.
  • A number of participating public and private sector banks also have the option of SCSS Application form download from their official websites.
  • Alternatively, one may choose to obtain the paper form at designated branches of participating banks in India.

What is the maturity period under this Scheme?

  • The maturity period of SCSS is five years.
  • However, the tenure can be extended by three more years after the maturity period of five years is over.
  • This extension option is currently available just once and the extension request has to be made within 1 year of maturity of the SCSS account. 

What is the interest rate under this Scheme?

  • As of April 2020, the interest rate available on the SCSS account is 7.4% per annum for the first quarter (April to June) of the financial year 2020-2021.
  • This rate of interest is reviewed quarterly by the Ministry of Finance and subject to periodic change.
  • Interest on SCSS account deposits is calculated and credited quarterly.
  • If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

Can the amount from the account be withdrawn before its maturity?

Yes, Premature withdrawal is allowed as follows:

  • If the account is closed before 1 year, no interest will be payable. If interest is already paid then the same will be recovered
  • If the account is closed after one year from the date of account opening, an amount equal to 1.5% of the deposit will be deducted as penalty
  • If the account is closed after 2 years from the date of account opening, then 1% of the deposit will be deducted as penalty

Can an individual open more than one account?

An individual may operate more than one account in individual capacity or jointly with spouse (husband/wife). Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts.

Is nomination facility available under this Scheme?

  • The depositor may nominate a person or more than one person. Nomination made by the depositor can be cancelled or changed at any time.
  • In the event of death of the primary account holder before actual maturity of the account, the account will be closed and all the maturity proceeds will be transferred to the legal heir/nominee.
  • For deceased claims, the nominee or the legal heir will have to fill out a written application in prescribed format along with Death Certificate to facilitate the closure of the account.

What are the tax benefits available under the Scheme?

SCSS comes with a maximum tax benefit of Rs 1.5 lakh under section 80C of the Income-tax Act. However, interest earned on SCSS is fully taxable. In case the interest amount earned is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.

Being a government-backed scheme, SCSS comes with all the protection associated with all government schemes. With benefits such as flexible investment amount, easy availability, tax deduction and reasonable return, SCSS encourages senior citizens to have this saving scheme as a medium or a long-term investment product in their financial kitty.

Rate of Interest on Government Saving Scheme from October 2020 to December 2020
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When senior citizens are not required to file their ITR?

When senior citizens are not required to file their ITR?

In India majority of older persons face financial hardship in old age as most of them are not in a position to earn their livelihood. Their savings, if any, are not enough to meet their day to day, particularly the medical expenses. Older persons with good net-worth value are in search of good short-term financial planning to earn a good income from their finance. The Income Tax law provides various benefits to senior citizens in India with the view to mitigate their issues.

Who is considered as a Senior Citizen in India?

According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is considered as a Super Senior Citizen in India?

A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.

Just because a senior citizen has been filing an ITR all his life does not necessarily mean that he/she is mandatorily required to file an ITR. Many a times, senior citizens continue filing their ITR’s even when they are not required by law. This may happen due to misinformation, fear of income tax penalties, lack of knowledge etc. Given below are certain situations where a senior citizen will not be required to file their ITR.

No taxable income after turning 60

The basic tax exemption limit for normal citizens below 60 years of age is Rs 2.5 lakh in a financial year. But for Senior Citizens, the exemption limit is Rs 3 lakh, while for Very Senior Citizens, the limit is Rs 5 lakh.

So, a Senior Citizen doesn’t have to pay any tax or file ITR in case the annual income is up to Rs 3 lakh and no TDS is deducted during the financial year. Similarly, a Very Senior Citizen is exempted from paying tax and filing ITR if his/her annual income is up to Rs 5 lakh and no TDS is deducted.

Pension is below the exemption limit

Retirement age is the age at which a person is expected or required to cease work and is usually the age at which they may be entitled to receive superannuation or other benefits. In India, generally people retire when they reach the age of 60 to 65 years after which they receive benefits such as pension, which is taxable under Income Tax.

With a pension, the employer guarantees an income in retirement. Employers are responsible for both funding the plan and managing the plan’s investments. Not all employers offer pensions, but government organizations usually do.

Essentially, on retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum to the pensioner while on the balance the pension begins. In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension. In such a case, the amount of pension will be lower than the amount of pension without any commutation.

This would lead to situations where your pension income falls below the basic exemption limit i.e not taxable and hence not liable to file ITR. Therefore, it is important to remember that even if your salary income exceeded the basic exemption limit (making you liable to file your ITR), it does not mean that your lower pension also exceeds the limit. Verify if your pension exceeds the basic exemption limit. There are chances that you would not be liable to file your ITR in case they do not.

Know Basic Exemption limit for Senior Citizens and Super Senior Citizen in India for FY 2019-20 and FY 2020-21

Filing an ITR depends upon nature of income

The ITR form applicable to a taxpayer is dependent on the type of taxpayer, whether individuals, HUF, company, etc., the nature of income and total income. You will not be required to file an ITR if you do not have taxable income under the 5 heads of income tax. To make an income chargeable, it should be under at least one of the five income heads:

  • Salary Income
  • House Property Income
  • Profits or Gains from Business or Profession
  • Capital Gains
  • Income from other Sources

For instance, suppose Mr A had properties from which he was earning rent. The same was taxable under the head ‘Income from House Property’. Mr A had no other source of income. In the current year, Mr A sold all his properties and was liable to pay capitals gains tax. He will file ITR in the current year declaring income under the head ‘Capital Gains’ and Income from House Property.’

However, from the subsequent year as Mr A will have no properties and thus no taxable income. Therefore, he will not be liable to file his ITR.

Senior citizens also receive a number of other benefits under Income Tax Provisions such as:

  • Deduction under Section 80TTB of Interest free Income
  • Additional Deduction under Section 80D
  • Additional Deduction under Section 80DDB
  • Senior citizens are free from burden of paying advance tax unless they make income under the head ‘Profits and Gains from Business or Profession’.
  • Super Senior Citizens (individuals above 80 years) can file for their Income Tax Return through either ITR-1 (Sahaj) or ITR-4 (Sugam). They can choose to do it either manually or electronically, while no other assessee can file Offline Returns.

Thanks to attractive tax deductions and benefits, the Income Tax Law has provided an advantageous position for senior citizens in India.

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5 simple steps to file ITR online by Senior Citizen having income from Pension and Interest

5 simple steps to file ITR online by Senior Citizen having income from Pension and Interest

As the Income tax filing season has started the taxpayers are busy with the compliance process. Senior citizens earn income through pension, interest from savings bank or fixed deposit. Such persons are required to file ITR 1. The process of filing ITR can be online on the efiling portal or offline through income tax utility provided by the Income tax department.

The government has extended the due date for payment of self-assessment tax to 30/11/2020. However, as per the notification, this has been done only for those taxpayers whose self-assessment tax liability is up to Rs 1 lakh. Thus, senior citizen whose self-assessment tax liability is more than Rs 1 lakh will not get benefitted from this extension in date. In this case, the whole of the self-assessment tax shall be payable by the due date i.e. 31st July 2020 specified in the Income-tax Act, 1961 and delayed payment would attract interest under section 234A of the IT Act.

For more information please read this article:

Senior Citizens are liable to pay Income Tax by 31 July if Tax liability more than 1 Lakh for FY 2019-20

The process of filing ITR online is very easy and quick. In this article we will enable you to understand how to file ITR of senior citizen having income from pension and interest. 

Procedure to File ITR online by senior citizen:

Below is the procedure to file Income Tax Return by Senior Citizen having income from pension and interest:

Step 1: Go to

https://www.incometaxindiaefiling.gov.in/home and login to the portal using Login credentials

Step 2: Now go to ‘E file” tab and select “Income tax return”

It will redirect you to “Income tax return” page

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Step 3: Now, Select the following

a. Assessment year for which return is to be filed

b. ITR form number

c. Submission mode as “Prepare and submit online”

d. Filing type as original/ revised return

Now, select the bank account number from the list of bank accounts for credit of Income tax refund amount and click on “continue” button.

A pop up will appear. Now, select the check box and click on “continue” button.

It will redirect you to ITR form.

Step 4: Filing of ITR 1- Sahaj form

The ITR form has the following tabs:

1. Part A General Information

In this tab the assessee is required to go through his basic details like communication details and PAN details and check whether it is correct or not.

Also, select, yes or no from the drop down, whether you are eligible for filing return under 7th proviso of section 139(1).

Now proceed to “Computation of Income and tax” tab

2. Computation of Income tax:

In this tab the senior citizen has to enter the pension income, amount of interest earned during the financial year and deduction details. The treatment and deduction of income is as below:

A. Pension Income:

There are two type of pension earned by the assessees which are to be filed in ITR as follows:

i. Employer pension: In this case the assessee has received form 16 during the year he has to fill Part B1 point (a) – Salary as per section 17(1) under Salary and fill the amount of pension received during the year.

ii. Family Pension: Family pension is defined in Section 57 as a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of death of employee. In this case the assessee is receiving family pension or any other pension other than employer pension than he has to fill part B3 under Income from other sources. Where income is from family pension than assessee has to select “Family pension” from the drop down and enter the amount of pension received during the financial year.

The assessee is also required to enter the deduction under section 57(iia) with respect to family pension which is lower of Rs. 15,000 or 1/3rd of the amount of pension received during the Financial year.

Where the assessee is earning pension other than above two than he has to enter the details of such pension under Part B3 of Income from other sources and select “Other” from the drop down, enter Pension in the description box provided and enter the amount of pension received during the financial year.

B. Interest income:

Where the assessee is earning interest income from savings bank or deposit than he has to enter the details of such pension under Part B3 of Income from other sources and select the relevant option from the drop down and enter the amount received during the financial year.

C. Deduction details:

The assessee has to provide the deduction details under chapter VIA.

3. Tax details:

It provides the details of TDS deducted by the deductor and advance tax paid during the financial year. The assessee has option to edit the details in case incorrect details are being displayed.

4. Tax paid and verification

This tab displays the amount of tax payable or refund and also the verification form where the assessee has to select the mode of verification i.e. through Aadhaar otp or post or verify later.

5. Schedule DI i.e. Details of investment:

It displays the details of deduction mentioned in computation of income tax.

6. Schedule 80D:

In this tab the assessee has to provide mediclaim made during the year and provide the amount of premium paid during the year. The assessee as to enter details in either select option 1 or option 2 accordingly.

7. Schedule 80G: In this tab the assessee has to provide the details of donation made during the financial year to trust. Where the assessee has to enter the relevant clause of deduction and the details of done along with the amount of donation

8. Schedule 80GGA: In this tab the assessee has to provide the details of donation made for scientific research and rural development where the assessee has to enter the relevant clause of deduction and the details of done along with the amount of donation.

Step 5- Submission and e- verification

After filing all the Tabs the assessee has to Preview the entire return and Select the appropriate verification option from the Taxes and Verification Tab and select Preview and submit your returns. Once the filing is done E- verify your return as selected and your ITR return filing process will be completed.

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What is due date to pay tax for Senior Citizens for FY 2019-20 as per Income Tax Notification 29 July 2020?

What is due date to pay tax for Senior Citizens for FY 2019-20 as per Income Tax Notification 29 July 2020

As per the Lockdown guidelines issued by Ministry of Home Affairs, Senior Citizens above age 65 are required to stay at home, unless it’s urgent or emergency like hospital visits.

The Income tax department has time to to time extended due dates for Income Tax filing returns and also paying taxes because of many states still in lockdown and hardly 10% staff are working in professional offices and banks which makes difficult for senior citizens to comply the deadlines and due dates in income tax for payment of taxes and filing returns

In normal scenario as per income tax laws resident senior citizens are not required to pay any advance tax if income is from other than business activities, like interest, divided, pension etc. They can pay tax at the time or before filing of Income Tax Returns for which every year the due date is 31 July.

Considering this year as exceptional due to Covid19, the Income Tax Department has extended many due dates including date to file Income Tax Returns and Revise returns for last FY 2018-19 from 31 July to 30 September as per recent notification No dated 29 July 2020

Senior Citizen are most vulnerable segment as they are not use to pay advance tax and pays taxes only at the time of filing return before due date (as no int is applicable to them)

The Senior Citizens are use to pay taxes only at the time of filing Income Tax Returns. However considering Corona Virus and Lockdown Government has extended due dates to File Income Tax Returns for all Taxpayers to 30 November 2020. However Government is also in needs of funds so it has decided for large taxpayers having liability of more than 1 Lakh to pay Taxes by 31 July 2020, after that interest on tax will be applicable as per provision of Income Tax

According to Section 207 of the Act, a resident senior citizen (an individual of age 60 years or more) who does not have any income from business or profession is not liable to pay advance tax. For instance, a senior citizen may have various sources of income such as rental income, pension, interest from bank deposits, or dividends. She does not have to pay advance tax, as these sources of income do not fall under the income tax head of “income from business or profession”. Such an exemption is irrespective of the amount of income that a senior citizen earns from a source other than business or profession.

However in case the total self-assessment tax liability of senior citizen is more than Rs. 1,00,000 than the due date for paying self-assessment tax is on or before 31st July 2020 and not 30th November 2020.

What Income Tax Notification 29 July 2020 says for Senior Citizen?

The CBDT has issued following Notifcation

For Assessment Year 2020-21 Financial Year 2019-20, resident Senior citizen not required to pay advance tax under section 207, any self assessment tax paid by pre extended due date ( 31 July 2020 ) to be treated as advance tax. Thus after this payment if tax remaining to be paid is less than 1 lakh, no interest under 234A

Without this correction, senior citizen not required to pay advance tax and having self assessment tax of more than 1 Lakh would have had to file tax return by 31 July to avoid interest under section 234A

What is Interest for delay in filing of Income tax return (Section 234A):

Section 234A, is levied for delay in filing the return of income. Interest is levied at the rate of 1% per month or part of the month simple interest basis. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month after 31st July 2020 in case the self-assessed tax liability is more than Rs. 1 lakh. Interest shall be calculated from the 1st August 2020 till the actual date of payment.

To correct above and to provide relief to Senior Citizen CBDT has issued Income Tax Notification 29 July 2020

To illustrate if Mr A is Senior Citizen covered under 207. Mr A have to pay tax of 3 lakh for FY 2019-20 and he pay 2.5 lakh by 31 July. Taking into account circular 2/2015 of 29 July 2020, Interest under section 234A would be levied on 50000. However now since Self Assessment Tax pending after his original due date (31July 2020) is less than one lakh no interest will be applicable as per 234A

Understand with more Examples

TaxpayerTotal tax liability (A)Total TDS and Advance tax paid (B)Self-assessment tax payable (A-B)Self Assessment Paid  Tax onIncome Tax Return FiledIs Interest u/s 234A applicable
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 1,50,000 before 31 July 2020On or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 51,000 before 31 July 2020 Balance Rs 99,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 49,000 before 31 July 2020 Balance Rs 1,01,000 on 30 Nov30 NovemberYes From 1 Aug to 30 Nov
Senior citizen having income from interest pension etc3,00,0001,50,0001,50,000Rs 49,000 before 31 July 2020 Balance Rs 1,01,000 before 31 Aug Nov31 AugYes For month of  Aug
Senior citizen having income from interest pension etc3,00,0002,00,0001,00,000Rs 1,00,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc3,00,0002,50,00050,000Rs 50,000 before 30 NovOn or before 30 NovemberNo
Senior citizen having income from interest pension etc90,000090,000Rs 90,000 before 30 NovOn or before 30 NovemberNo
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Senior Citizens are liable to pay Income Tax by 31 July if Tax liability more than 1 Lakh for FY 2019-20

Senior Citizens are liable to pay Income Tax by 31 July if Tax liability more than 1 Lakh for FY 2019-20

The COVID 19 pandemic has been largely disruptive to the growth of India. With an ever increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.

Due to the emerging financial distress faced by most people on account of the large-scale economic distress caused by COVID 19, the Government of India had extended the due dates of various provisions to provide relief in the current pandemic situation. The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several areas of Income Tax, GST, Customs & Central Excise and Corporate Affairs.

What is self-assessment tax?

  • Self-assessment tax refers to any balance tax that has to be paid by an assesse on his assessed income after the TDS and advance tax have been taken into account before filing the return of income of which last date is 31 July 2020
  • The IT return cannot be submitted to the IT Department till the time the taxes have been paid.
  • At the end of the year, if there is any tax that is pending before filing the ITR, there is a final amount that has to be calculated which is known as the Self-Assessment Tax.
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Ministry of Finance (CBDT) issued Notification 35/2020 on 24.06.2020 extending the time limit for filing ITRs, TDS/TCS returns, making investments etc. for AY 2020-21 & 2019-20

Provided below are the latest deadlines pertaining to filing of returns

  1. The time for filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) has been extended to 31st July, 2020.
  2. Due date for income tax return for the FY 2019-20 (AY 2020-21) has been extended to 30th November, 2020.
  3. To give some relief to the middle class and small taxpayers, the government has extended the due date for payment of self-assessment tax to 30.11.2020. However, as per the notification, this has been done only for those taxpayers whose self-assessment tax liability is up to Rs 1 lakh. Thus, taxpayers whose self-assessment tax liability is more than Rs 1 lakh will not get benefitted from this extension in date. In this case, the whole of the self-assessment tax shall be payable by the due dates specified in the Income-tax Act, 1961 and delayed payment would attract interest under section 234A of the IT Act.
  4. Interest at the reduced rate of 9% (i.e. 0.75% per month instead of 1% per month) will be charged on delay in respect of following payments made between 20.03.2020 and 30.06.2020.
  5. The reduced rate of interest of 9% for delayed payments of taxes, levies etc. shall not be applicable for the payments made after 30th June, 2020.

Is Senior Citizen Liable to pay advance tax?

Under income tax law, if taxpayers’ tax liability is more than Rs 10,000 (except for senior citizen not having business income), then taxpayers are subject to payment of advance tax.

Hence, a taxpayer, who is liable to pay income tax of more than Rs 10,000 in FY 2019-20, is required to discharge its tax liability on or before 15th March 2020 (last date for the last instalment of advance tax). However, under the reliefs provided by government due to Covid-19, the last date for payment of advance tax was extended from 15th March 2020 to 30th June 2020.

Taxpayers who are falling under the cap of Advance tax should discharge their tax liability before 30th June to avoid any interest liability. Interest liability can arise only if tax dues are not paid by the due date prescribed.

According to Section 207 of the Act, a resident senior citizen (an individual of age 60 years or more) who does not have any income from business or profession is not liable to pay advance tax. For instance, a senior citizen may have various sources of income such as rental income, pension, interest from bank deposits, or dividends. She does not have to pay advance tax, as these sources of income do not fall under the income tax head of “income from business or profession”. Such an exemption is irrespective of the amount of income that a senior citizen earns from a source other than business or profession.

However in case the total self-assessment tax liability of senior citizen is more than Rs. 1,00,000 than the due date for paying self-assessment tax is on or before 31st July 2020 and not 30th November 2020.

What are the various provision of interest under income tax applicable for senior citizen?

The following are the various interest covered for late or short payment of income tax:

1) Interest for delay in filing of Income tax return (Section 234A):

Section 234A, is levied for delay in filing the return of income. Interest is levied at the rate of 1% per month or part of the month simple interest basis. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month after 31st July 2020 in case the self-assessed tax liability is more than Rs. 1 lakh. Interest shall be calculated from the 1st August 2020 till the actual date of payment.

2) Interest for default in payment of advance tax (Section 234B):

Apart from above interest the assesse shall be liable for interest 234B and 234C i.e. interest for default in payment of advance tax and interest on deferred payment of advance tax. As per section 234B, interest at 1% per month or part of a month is levied if assesse has paid less than 90% of the advance tax. The nature of interest is simple interest. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month for default in payment of advance tax. The period for interest shall be from 1st April of the assessment year till actual date of payment. However, this provision does not apply to senior citizen having income other than business as senior citizen are not liable for advance tax.

3) Interest for deferred payment of advance tax (Section 234C):

As per section 234C, interest is imposed when there is a deferred in payment of an instalment of advance tax. The assesse will pay interest under section 234C as below:

Period of  Amount on whichRate of InterestPeriod of Interest Amount on which interest is calculated
Advance Tax paid on or before June 15 is less than 15% of the total advance tax liabilitySimple interest @1% per month3 months15% of total advance tax less tax already deposited before June 15
If Advance Tax paid on or before September 15 is less than 45% of the total advance tax liability Simple interest @1% per month3 months45% of total advance tax less tax already deposited before September 15
If Advance Tax paid on or before December 15 is less than 75% of the total advance tax liability Simple interest @1% per month3 months75% of total advance tax less tax already deposited before December 15
If Advance Tax paid on or before March 15 is less than 100% of the total advance tax liabilitySimple interest @1% per month1 months100% of total advance tax less tax already deposited before March 15

However, this provision does not apply to senior citizen having income other than business as senior citizen are not liable for advance tax.

Understanding with examples:

AssesseeTotal tax liability (A)Total TDS and Advance tax paid (B)Self-assessment tax payable (A-B)Due date of paying self-assessment taxIs Interest u/s 234A applicable (If paid by due date)Is Interest u/s 234B applicableIs Interest u/s 234C applicable
Senior citizen having income other than Business10,00,0009,00,0001,00,00031st July 2020NoNoNo
Senior citizen having income from Business10,00,0009,00,0002,00,00031st July 2020NoNo (90% advance tax not paid)Yes
Senior citizen having income from Business and other sources10,00,0009,50,00050,00030thNovember 2020NoNoYes
Senior citizen having income from Business1,00,00001,00,00031st July 2020NoYesYes
Senior citizen having income from Business and other sources50,000050,00030thNovember 2020NoYesYes
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Pay your Income Tax for FY 2019-20 before 31 July 2020 if tax liability is more than Rs 1 lakh

Pay your Income Tax for FY 2019-20 before 31 July 2020 if tax liability is more than Rs 1 lakh

The COVID 19 pandemic has been largely disruptive to the growth of India. With an ever increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.

Due to the emerging financial distress faced by most people on account of the large-scale economic distress caused by COVID 19, the Government of India had extended the due dates of various provisions to provide relief in the current pandemic situation. The Union Finance & Corporate Affairs Minister Smt. Niramla Sitharaman announced several important relief measures taken by the Government of India in view of COVID-19 outbreak, especially on statutory and regulatory compliance matters related to several areas of Income Tax, GST, Customs & Central Excise and Corporate Affairs.

What is self-assessment tax?

  • Self-assessment tax refers to any balance tax that has to be paid by an assesse on his assessed income after the TDS and advance tax have been taken into account before filing the return of income of which last date is 31 July 2020
  • The IT return cannot be submitted to the IT Department till the time the taxes have been paid.
  • At the end of the year, if there is any tax that is pending before filing the ITR, there is a final amount that has to be calculated which is known as the Self-Assessment Tax.

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Ministry of Finance (CBDT) issued Notification 35/2020 on 24.06.2020 extending the time limit for filing ITRs, TDS/TCS returns, making investments etc. for AY 2020-21 & 2019-20

Provided below are the latest deadlines pertaining to filing of returns

  1. The time for filing of original as well as revised income-tax returns for the FY 2018-19 (AY 2019-20) has been extended to 31st July, 2020.
  2. Due date for income tax return for the FY 2019-20 (AY 2020-21) has been extended to 30th November, 2020.
  3. To give some relief to the middle class and small taxpayers, the government has extended the due date for payment of self-assessment tax to 30.11.2020. However, as per the notification, this has been done only for those taxpayers whose self-assessment tax liability is up to Rs 1 lakh. Thus, taxpayers whose self-assessment tax liability is more than Rs 1 lakh will not get benefitted from this extension in date. In this case, the whole of the self-assessment tax shall be payable by the due dates specified in the Income-tax Act, 1961 and delayed payment would attract interest under section 234A of the IT Act.
  4. Interest at the reduced rate of 9% (i.e. 0.75% per month instead of 1% per month) will be charged on delay in respect of following payments made between 20.03.2020 and 30.06.2020.
  5. The reduced rate of interest of 9% for delayed payments of taxes, levies etc. shall not be applicable for the payments made after 30th June, 2020.
Pay your Income Tax for FY 2019-20 before 31 July 2020 if tax liability is more than Rs 1 lakh
Pay your Income Tax for FY 2019-20 before 31 July 2020 if tax liability is more than Rs 1 lakh

Who is required to pay advance tax?

Under income tax law, if taxpayers’ tax liability is more than Rs 10,000 (except for senior citizen not having business income), then taxpayers are subject to payment of advance tax.

Hence, a taxpayer, who is liable to pay income tax of more than Rs 10,000 in FY 2019-20, is required to discharge its tax liability on or before 15th March 2020 (last date for the last instalment of advance tax). However, under the reliefs provided by government due to Covid-19, the last date for payment of advance tax was extended from 15th March 2020 to 30th June 2020.

Taxpayers who are falling under the cap of Advance tax should discharge their tax liability before 30th June to avoid any interest liability. Interest liability can arise only if tax dues are not paid by the due date prescribed.

What are the various provision of interest under income tax applicable?

The following are the various interest covered for late or short payment of income tax:

1) Interest for delay in filing of Income tax return (Section 234A):

Section 234A, is levied for delay in filing the return of income. Interest is levied at the rate of 1% per month or part of the month simple interest basis. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month after 31st July 2020 in case the self-assessed tax liability is more than Rs. 1 lakh. Interest shall be calculated from the 1st August 2020 till the actual date of payment.

2) Interest for default in payment of advance tax (Section 234B):

Apart from above interest the assesse shall be liable for interest 234B and 234C i.e. interest for default in payment of advance tax and interest on deferred payment of advance tax. As per section 234B, interest at 1% per month or part of a month is levied if assesse has paid less than 90% of the advance tax. The nature of interest is simple interest. In other words, the taxpayer is liable to pay simple interest at 1% per month or part of a month for default in payment of advance tax. The period for interest shall be from 1st april of the assessment year till actual date of payment.

3) Interest for deferred payment of advance tax (Section 234C):

As per section 234C, interest is imposed when there is a deferred in payment of an instalment of advance tax. The assesse will pay interest under section 234C as below:

Period of  Amount on whichRate of InterestPeriod of Interest Amount on which interest is calculated
Advance Tax paid on or before June 15 is less than 15% of the total advance tax liabilitySimple interest @1% per month3 months15% of total advance tax less tax already deposited before June 15
If Advance Tax paid on or before September 15 is less than 45% of the total advance tax liability Simple interest @1% per month3 months45% of total advance tax less tax already deposited before September 15
If Advance Tax paid on or before December 15 is less than 75% of the total advance tax liability Simple interest @1% per month3 months75% of total advance tax less tax already deposited before December 15
If Advance Tax paid on or before March 15 is less than 100% of the total advance tax liabilitySimple interest @1% per month1 months100% of total advance tax less tax already deposited before March 15

A person, who is not under the bracket of advance tax, can enjoy this extension relief till 30.11.2020. However, for the rest of the taxpayers it is suggested to pay all their tax liabilities related to FY 19-20 before 30th June 2020 to save interest on taxes and file their returns before the extended date to avoid further interest and penalties.

Due date for payment of Self Assessment Tax where amount payable is Rs 100,000 has not been extended. In case of failure to do so, interest under Section 234A will be levied at 1% per month. This means individual taxpayers need to ascertain their tax liability by 31 July 2020 and discharge the Self-Assessment Tax if the same is Ps 100,000 or more. (for individuals/ certain other taxpayer – 31 July 2020 and for companies/ entities subject to Tax Audit – 31 October 2020).

Self-assessment tax in case of senior citizen FY 2019-20

Senior citizen are not liable for paying advance tax, but in case the total self-assessment tax liability of senior citizen is more than Rs. 1,00,000 than the due date for paying self-assessment tax is on or before 31st July 2020 and not 30th November 2020.

Understanding with examples:

Total tax liability (A)Total TDS and Advance tax paid (B)Self-assessment tax payable (A-B)Due date of paying self-assessment taxIs Interest u/s 234A applicable (If paid by due date)Is Interest u/s 234B applicableIs Interest u/s 234C applicable
10,00,0009,00,0001,00,00031st July 2020NoNo (90% advance tax paid)Yes
10,00,0008,00,0002,00,00031st July 2020NoYes (90% advance tax not paid)Yes
10,00,0009,50,00050,00030thNovember 2020NoNoYes
1,00,00001,00,00031st July 2020NoYesYes
50,000050,00030thNovember 2020NoYesYes

The TDS return filing for March 2020 is extended to 31July 2020 and issue Form 16/ Form 16A by 15 August 2020. Thus, the above requirement to pay Self- Assessment Tax puts individual in an impossible situation as updated Form 26AS may not be available to ascertain tax liability and amount of TDS already deducted. Taxpayers need to start following up for obtaining Form 16/ Form 16A so that they can pay Tax on time

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How Senior Citizen can earn more Interest by shifting from FD to Senior Citizen Saving Scheme?

How Senior Citizen can earn more Interest by shifting from FD to Senior Citizen Saving Scheme?

In 2004 government introduced the Senior citizen Savings Scheme in order to provide guaranteed return to the senior return and in doing so to create a guaranteed regular income flow. Investing in Senior Citizen Savings Scheme is a good opportunity for senior citizens above 60 years to generate good income. It is a long-term saving option which offers security and also some added features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India. In this article we will talk about the various features of the senior citizen savings scheme.

Features of investing in SCSS

1. Minimum entry restrictions: The applicant must be of more than 60 years of age and he can avail the scheme in any of the nearest authorized bank. The applicant can enter the scheme with a minimum deposit of Rs. 1000 or any sum in multiple of Rs. 1000 not exceeding Rs. 15 lakhs. It is also transferable across India.

2. Secured and Trustworthy: Senior Citizen Savings Scheme is a safe and trustworthy investments as it is a government-sponsored investment scheme thus considered as one of the safest and most reliable investment options.

3. Interest rate: In 2019 -20 the scheme offered interest rate of 8.6% Currently in FY 2020-21 for Q1 the interest rate is 7.4% The return rate is far better as compared to a savings or FD account which is in range of 5% to 6%. The scheme also offers ECS transfer of interest to savings account.

4. Nomination facility: Nomination facility is been made available at the time of opening of account by the applicant through submission of an application as part of Form C. This submission is also accompanied by the passbook to the Branch.

5. Tax benefits: Senior Citizen Savings Scheme provides a tax deduction benefit of up to Rs.1.5 lakh under Section 80C of the Indian Tax Act, 1961.

6. Tenure: The investment under senior citizen savings scheme is subject to a lock in period of 5 years. which means the applicant cannot withdraw the investment amount till the completion of 5 years from the date of opening of the account. The account holder has option to extend the tenure to a further 3 more years. Premature closing of deposit is attached with penalty.

7. Capital Protection: The capital investment in the scheme is completely protected as it is backed by the Government of India. But the scheme is not inflation protected, means whenever inflation is above the current interest rate, the deposit earns no real returns. However, when the inflation rate is below the current interest rate, it does manage a positive real rate of return.

8. How to open an SCSS account: An SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:

  1. Form A  has to be filled for opening an SCSS Account.
  2. Identity proof like PAN card, Aadhaar to be presented.
  3. Address proof such as Telephone bill, Aadhar card is mandatory.
  4. Document for proof of age is required. This could be in the form of a Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or Registrar of Births and Deaths, Voter ID card

8. Banks applicable for SCSS Account

Following are the banks where an SCSS account can be opened:

  1. Allahabad Bank
  2. Andhra bank
  3. Bank of Maharashtra
  4. Bank of Baroda
  5. Bank of India
  6. Corporation Bank
  7. Canara Bank
  8. Central Bank of India
  9. Dena Bank
  10. IDBI Bank
  11. Indian Bank
  12. Indian Overseas Bank
  13. Punjab National Bank
  14. State Bank of India
  15. Syndicate Bank
  16. UCO Bank
  17. Union Bank of India
  18. Vijaya Bank
  19. ICICI Bank

To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At an 7.4% interest rate and an investment amount of 15 lakhs, the monthly income is stated to be Rs 9,250 per month for each investor. There is no family limit, both husband and wife can open separate account

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Extra Time Given to Senior Citizen and Others to file Form 15G & 15H to avoid TDS for FY 2020-21

Extra Time Given to Senior Citizen and Others to file Form 15G & 15H to avoid TDS for FY 2020-21

The Income Tax Department has given facility to Senior Citizen to File Form 15G to prevent TDS deduction on your income and Other Individuals to file Form 15H, Mostly the Forms are Submitted in Bank in First week of April to avoid TDS Deduction by Bank on the interest income

PAN is compulsory to avail the above benefit and Following condition are to be satisfied before filing by Senior Citizen & Others

  1. You are an individual or HUF
  2. Only Resident Indians can apply. Non Resident – NRI Cannot apply
  3. Your Age should be Equal to or more than 60 Years for Form 15G and for every one else they can apply in Form 15H
  4. Tax calculated on your Total Income is NIL for the Financial Year 2020-21

Banks and Post office will Deduct TDS if the Interest Income is more than Rs 40,000/- in any Financial Year from Finance Act 2019 onward . So in case your total income is below taxable limit even after considering Tax Rebate (i.e If Income is below 5 Lakh Rs) you can still file Form 15G and Form 15H

The Central Board of Direct Taxes (CBDT) has allowed the Form 15G/Form 15H submitted by taxpayers for FY 2019-20 to remain valid till June 30, 2020 for FY 2020-21. Below is the Tweet from Income Tax Department

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Due to outbreak of pandemic Covid-19 virus, there is severe disruption in the normal working of almost all sectors of economy including functioning of the Banks, other Institutions etc. Amidst such situation, there can be instances that some eligible persons may not be able to submit the Form 15G and 15H timely to the Banks, other Institutions etc . This would result into the deduction of TDS by the Banks and other Institutions even where there is no tax-liability. To mitigate the genuine hardship of such persons, the CBDT issues following directions/clarifications by exercise of its powers u/s 119 of the Act.

In case if a person had submitted valid Forms 15G and 15H to the Banks or other Institutions for F.Y. 2019-20, then these Form 15G and 15Hwill be valid up to 30.06.2020 for FY 2020-21 also. It is reiterated that the payer who has not deducted tax on the basis of said Forms 15G and 15H,shall require to report details of such payments/credits in the TDS statement for the quarter ending 30.06.2020 in accordance with the provisions of rule 31A(4)(vii) of the Income-tax Rules, 1962.

The extension has come as a big relief for Senior Citizen and others who were worried because of Lockdown and Non Submission the validity of Form 15G and Form 15H for FY 2020-21

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Pay Income Tax on Dividend Received on Shares and Mutual Fund from 1 April 2020 know how to avoid TDS – Click here to read

New income tax rules from 1 April 2020 Find out what changes from today. View Video Below

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