The sense of relief that senior citizens above the age of 75 years felt after the Budget speech of finance minister Nirmala Sitharaman seems to be short-lived as the devil in the budget details is tumbling out.

During her budget speech, Sitharaman said, “In the 75th year of independence of our country, the government shall reduce compliance burden on senior citizens who are 75 years of age and above. For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income.”

This brought cheers from senior citizens who had to file annual income tax returns even though they did not have to pay or claim a refund.

Describing the relief in the cricket season in the game’s terminology, Mayank Mohanka, founder director at TaxAaram India, said the finance minister has bowled “googlies” and the fine print must be read carefully.
“The interest income must be from the same pension paying bank only and that the pension paying bank must also be notified by the government, and for claiming refund, if any, ITR has to be filed,” he said.

Tax experts said more clarity is needed from the government and the banks regarding whether senior citizens earning interest income from multiple banks would qualify for the exemption of filing tax returns.
Also there is no clarity whether the declaration to the bank has to be done on an annual basis or one time, they added.

The finance bill laid out the conditions that need to be fulfilled — the senior citizen is resident in India and of the age of 75 or more during the previous year; he has pension income and no other income. However, in addition to such pension income the senior citizen may also have interest income from the same bank in which he is receiving his pension income.

Further, this bank must be a specified one. The government will be notifying a few banks which will be considered as a specified bank; and the pensioner shall be required to furnish a declaration to this bank. The declaration will contain all particulars in a specified form and will have to be verified in the manner prescribed.

“Once the declaration is furnished, the bank would be required to compute the income after giving effect to the deduction allowable under chapter VI-A and rebate allowable under section 87A of the Act, for the relevant assessment year and deduct income tax on the basis of rates in force,” said the Budget document.

“Once this is done, there will not be any requirement of furnishing returns for this assessment year,” it added.