Retirees receiving pension need to file ITR, here's how to do it.
Retired individuals who receive pension must file their Income Tax Returns (ITR) as their pension is taxed as income from salary by the Income Tax Department. Senior citizens who are 60 years or more but less than 80 years during the previous year are considered for tax purposes as senior citizens, while those 80 years or older are considered super senior citizens. Senior citizens receiving up to Rs 3 lakh annually are exempted from paying income tax under the old taxation regime, while those under the new scheme are exempted if their annual income is below Rs 2.5 lakh.
Here's everything you need to know about filing pension income in your tax returns:
Different types of pension are taxed differently. While family pension received by the rightful heirs of a deceased person is taxed under the "Income from other sources" part of the ITR, pension received from the state or the federal government is completely taxable under "salary." Pension from private enterprises is reported as "income from salary" on the ITR.
To file your returns online, visit the website incometax.gov.in and use Form 16 or 16A as applicable. After logging in to the ITR portal, calculate your income tax liability based on your pension and other sources of income. Reconcile your tax deducted at source with the net tax payable using Form 26AS, fill in the details of the ITR form, and file your tax returns by the due date.
Pensioners can avail of tax benefits under Section 80C, 80CCC, and 80CCD for payments towards provident fund, life insurance premiums, national savings certificates, pension schemes of the central government and annuity plans of Life Insurance Corporation of India or other insurers towards pension schemes under the old taxation regime. The combined deduction limit under these sections is Rs 1,50,000, and the exemptions cannot be availed of if the pensioner is under the new tax regime.
Tax deduction is applicable under Section 80CCD(2) for the contribution made by an employer to the pension scheme of the Centre under both the old and new tax regimes. If the employer is a public sector unit, state government or other unit mentioned under the section, the deduction limit is 10% of salary. If the employer is the central government, the deduction limit is 14% of salary.