Senior citizens required to disclose entire interest income

SC Vasudeva

There is confusion among senior citizens. Kindly clarify the following points:

1) For the financial year 2019-20 (assessment year 2020-21), income exempted from tax for senior citizens is Rs 5 lakh. Is it for those above 80 years or for all senior citizens?

2) Similarly, up to Rs 50,000 income from interest is exempted for senior citizens above 80 years or for all senior citizens? Is it necessary to show interest income in the return even if it is within the permissible limit? — AD Bubber

Your queries are replied hereunder:-

1) An individual resident in India whose total income does not exceed Rs 5 lakh is entitled to a rebate of Rs 12,500 from the tax payable. Therefore, such an assessee is not liable to pay tax if his income does not exceed Rs. 5 lakh. This provision is applicable to all resident individual assessees for assessment year 2020-21 (financial year ending 31.3.2020). In case of a senior citizen who is 80 years or more, he or she is exempted from tax, if his income does not exceed Rs 5 lakh on the basis of initial slab of tax payable by him/her.

2) The deduction to the extent of Rs 50,000 is allowable to a senior citizen in respect of the interest earned from bank deposits and post office deposits. This deduction is permissible to all senior citizens, including those above the age of 80. It is essential to disclose the entire interest income and claim a deduction of Rs 50,000 in case the return income is filed by a senior citizen.

Section 195(6) recently amended by the Finance Act 2015 (applicable w.e.f. 1.6.2015) requires permission to the information regarding payments to non-residents. Is it applicable to all payments irrespective of TDS applicability, like payment of overseas commission, payment against imports or any other payment where payee is having no place of business in India? — Chander Prakash

The amended provisions now require that a person responsible for paying to a non-resident not being a company or to a foreign company, any sum, whether or not chargeable under the provisions of the Income Tax Act 1961, shall furnish information relating to payment of such sum, in such form and manner, as may be prescribed. Therefore, the requirement is now being changed and information shall have to be provided with regard to all payments whether taxable or not taxable.

I have let out a commercial property situated in a mall. What are the deductions available against such income for the purpose of computing taxable income? — Raj Narain

The Act provides that the annual value of a house property consisting of any buildings or lands appurtenant thereto of which the assessee is owner shall be chargeable to income-tax under the head ‘income from house property’. The annual value of any property is deemed to be the sum for which the property might reasonably be expected to let from year to year or where the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum for which the property might reasonably be expected to let from year to year, the amount so received or receivable. For computing such annual value, the taxes levied by the local authority which have actually been paid during the year are deductible. The following deductions are allowable from the annual value so computed:

• 30% of the annual value.
• The amount of interest paid or payable on money borrowed for acquisition, construction or renovation of property.