Which ITR form is best for senior citizens for financial year 2024-25?

As the financial year 2024-25 progresses, senior citizens across India are preparing to file their Income Tax Returns (ITRs). Selecting the correct ITR form is crucial for ensuring compliance with tax laws and maximising benefits. Here's a comprehensive guide to help senior citizens choose the right form based on their income sources and circumstances.

“For senior citizens filing their Income Tax Return (ITR) for the financial year 2024–25 (Assessment Year 2025–26), the choice of form depends on the nature and amount of income. Most senior citizens who earn from pension, interest, and one house property, and whose total income does not exceed Rs 50 lakh, can use ITR-1 (Sahaj). However, those with capital gains, income exceeding Rs 50 lakh, or income from more than one house property should opt for ITR-2. If the senior citizen has income from business or profession, ITR-3 is appropriate. Alternatively, if they are opting for presumptive taxation under Sections 44AD or 44ADA with income up to Rs 50 lakh, ITR-4 (Sugam) may apply,” said Amit Bansal, partner, Singhania & Co.

Sujit Sudhakar Bangar, founder, TaxBuddy.com explains where they should invest to get maximum benefit?

When it comes to investments, safety, and steady returns are the top priorities. The Senior Citizens Savings Scheme (SCSS) is still the most rewarding option in 2025, with a revised deposit limit of Rs 30 lakh and an attractive interest rate of 8 per cent per annum, paid quarterly.

Calculate Income Tax: Income Tax Calculator Tool

Other good options include the Post Office Monthly Income Scheme (POMIS), offering 7.4 per cent returns, and Public Provident Fund (PPF), which gives tax-free returns and long-term security. Fixed deposits with a 5-year lock-in are also eligible under Section 80C.

Budget 2025-26 has also extended tax exemption to withdrawals from certain National Savings Scheme (NSS) accounts, which improves liquidity without a tax hit. A mix of these options based on income needs and lock-in preferences is ideal. Withdrawals from National Savings Scheme accounts made on or after August 29, 2024, are exempt from tax, providing liquidity without additional tax liability.

Naveen Wadhwa, vice-president, Taxmann explains what are the points to keep in mind for senior citizens while filing an ITR?

One common mistake people make is failing to disclose their petty incomes, such as interest earned on a savings bank account, under the assumption that it is exempt from tax up to Rs 10,000 (Rs. 50,000 in case of senior citizens). The interest income is actually taxable, and a corresponding deduction is allowed under Section 80TTA for up to Rs. 10,000/Rs 50,000.

Selecting the incorrect Income Tax Return (ITR) form can result in incomplete reporting of information, potentially leading to a defective income tax return. Moreover, it may trigger a notice for underreporting of income.

Income from all bank accounts should be reported, not just the bank account in which a refund is being claimed. One should verify all credit entries in the bank statement of the relevant financial year to identify the interest, dividend, or any other income to be reported in the ITR form.

While preparing your tax returns, it is essential to ensure that there are no discrepancies or inconsistencies, especially when it comes to the TDS credit claimed. A mismatch between the TDS credit claimed in your return and the amount reflected in your Form 26AS can lead to a notice from the income tax department to inquire about the inconsistency. To avoid any such discrepancies, it is important to cross-verify the TDS credit claimed in your return with the amount displayed in your Form 26AS before filing your tax returns.

The option to file the Income-tax return in paper mode is available only to super senior citizens (a resident individual whose age is 80 years or more at any time during the relevant previous year), provided the return is filed in ITR 1 (Sahaj) and ITR 4 (Sugam).

A senior citizen who is a resident Indian and whose age is 75 years or more at any time during the previous year is not required to file his ITR if his tax has been deducted under section 194P by the bank.

Source Link: https://www.business-standard.com/finance/personal-finance/which-itr-form-is-best-for-senior-citizens-for-financial-year-2024-25-125040800745_1.html

Website Link: https://www.taxbuddy.com/





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