This is the tax return filing season, and the ITR filing process has also started. Like every citizen, senior citizens (resident individuals aged 60 years or above but less than 80 years) and super senior citizens (resident individuals aged 80 years or above) often make mistakes while filing their tax return.
“Senior citizens may sometimes face challenges while filing their tax returns, such as inadvertently misreporting pension income or overlooking interest earned from various bank or post office accounts. Occasionally, deductions specific to senior citizens, like those under Sections 80TTB, 80D, and 80DDB, may be missed or incorrectly claimed,” says Shubham Jain, Associate Director, Nangia Andersen LLP.
They, therefore, should carefully and diligently follow certain processes to ensure accuracy in filing ITR to maximise tax refunds and for smoother processing. Here are some common mistakes which senior and super senior citizens often make and how to avoid them:
1. Not Selecting the Right ITR Form
Like every person, senior citizens also sometimes make mistakes when selecting the ITR Form and filing returns because the appropriate tax return form depends on their income sources and total income.
For instance, the ITR-1 (Sahaj) Form needs to be selected by resident individuals (including senior citizens) if they have salary or pension income up to Rs 50 lakh, income from other sources (excluding lottery winnings and income from racehorses) as well as income from one house property only. Therefore, most senior citizens with a pension and interest income up to Rs 50 lakh can use ITR-1.
Likewise, individuals (including senior citizens) should opt for ITR-2 if their income exceeds Rs 50 lakh, have income from more than one house property, income from capital gains, and foreign assets or foreign income. Therefore, senior citizens with more complex income sources, such as capital gains or multiple properties, should use ITR-2.
ITR-4 (Sugam) is required to be used by resident individuals, Hindu Undivided Families (HUFs), and firms (other than LLPs) having total income up to Rs 50 lakh, income from business or profession computed U/S 44AD, 44ADA, or 44AE (presumptive taxation scheme), and income from salary/pension, one house property, and other sources.
However, those senior citizens and super senior citizens who have only a pension and interest income from the same bank are not required to file their income tax returns.
2. Not Choosing the Right Tax Regime
Senior citizens and super senior citizens sometimes also make mistakes while choosing between the Old Tax Regime and the New Tax Regime.
“The New Tax Regime provides lower tax slabs, but the Old Tax Regime allows deductions under sections 80C, 80D, 80TTB with a higher limit, bringing down taxes. Senior citizens should keep this in mind,” says Deepak Kumar Jain, Founder and CEO, TaxManager.in.
3. Not Verifying 26AS and AIS Records
Many a times senior citizens do not verify records with 26AS or AIS which leads to discrepancies in ITR and hence delays in tax refunds. This may also invite tax notices.
4. Not Claiming Tax Deduction u/s 80TTB
Under this section, senior citizens are allowed to claim tax deductions up to Rs 50000, but many of them fail to do so.
5. Not Submitting Form 15H
Senior Citizens are allowed to submit Form 15H for the avoidance of deduction of TDS on interest income. However, many of them fail to submit this form.
6. Higher Deductions u/s 80D or 80DDB
Senior citizens are allowed to claim tax deduction of Rs 50000 as health insurance premium under section 80D, whereas regular taxpayers are allowed with Rs 25000. “Under section 80DDB, they are allowed to claim tax deductions up to Rs 100000 in case of critical illness, which senior citizens normally tend to forget or miss claiming,” says Deepak Kumar Jain.
7. Not Filing ITR if income is below taxable limit
Many a time senior citizens forget to file their tax return if their income is below the taxable limit, but if any TDS has been deducted, they need to file ITR to claim their tax refunds.
Things To Keep in Mind When Submitting Tax Returns
When submitting their income tax returns, senior citizens and super senior citizens should carefully report all sources of income to ensure accuracy.
“Senior citizens who have income only from a pension or interest from the same bank do not need to file their tax return. Changes introduced in the capital gain tax regime (especially with respect to indexation benefits available to individuals on sale of land/building) introduced in the current year should be kept in mind while reporting. Further, it is of utmost importance that Form 26AS and documents such as Annual Information Statement (AIS) should be carefully reviewed to ensure that complete reporting is done in the ITR. This will mitigate unintended consequences and penal exposure,” suggests Shubham Jain.
Claiming Deductions To Avoid Notices
When claiming deductions, senior citizens should be particularly careful to ensure that all the claims made by them are genuine, properly documented, and aligned with the provisions of the I-T Act to avoid scrutiny or notices later. They must retain payment proofs such as premium receipts for medical insurance, interest certificates for deductions, or medical bills and prescriptions.
“Claimants also need to prevent submitting duplicate claims because it is essential to do so. The relevant period dictates that deductions should only be claimed for payments made during that specific time frame. Reporting all income sources correctly prevents discrepancies with Form 26AS or AIS which could result in automated notices,” says Shubham Jain.
The tax return will survive any tax department investigation when taxpayers conduct a thorough document review and properly categorise deductions and maintain consistent income records.
