The Income Tax Department taxes pensions as salary income, so retirees who receive them must submit their Income Tax Returns (ITR). For tax purposes, senior citizens are those who were 60 or older in the previous year but were younger than 80, whereas super senior citizens are those who were 80 or older.
Under the old tax system, seniors with annual incomes of up to Rs 3 lakh are exempt from paying income tax. Under the new system, seniors with annual incomes of less than Rs 2.5 lakh are exempt.
Here’s beginning and end you want to realize about documenting benefits pay in your assessment forms:
Taxes vary depending on the type of pension. While the “Income from other sources” section of the ITR applies to family pensions received by a deceased person’s heirs, the “salary” section applies solely to pensions received from the state or federal government. On the Income Tax Return (ITR), private company pensions are reported as “income from salary.”
Visit the website incometax.gov.in and use Form 16 or 16A, as appropriate, to submit your returns online. Calculate your income tax liability using your pension and other sources of income after logging in to the ITR portal. Accommodate your assessment deducted at source with the net expense payable utilizing Form 26AS, fill in the subtleties of the ITR form, and file your government forms by the due date.
Under the old tax system, pensioners can take advantage of tax breaks provided by Sections 80C, 80CCC, and 80CCD for contributions to the provident fund, life insurance premiums, national savings certificates, central government pension schemes, and annuity plans of the Life Insurance Corporation of India or other insurers for pension schemes.
The pensioner cannot take advantage of the exemptions if they are subject to the new tax regime because the combined deduction limit under these sections is Rs 1,50,000.
Under both the old and new tax systems, an employer’s contribution to the Centre’s pension scheme qualifies for a tax deduction under Section 80CCD(2).
The maximum amount that can be deducted from a worker’s pay is 10% of the worker’s salary if the employer is a unit of the public sector, the state government, or another unit mentioned in the section. The maximum amount that can be deducted from a salary is 14% if the central government is the employer.
