Audit Companion

What benefits apply for Senior Citizens under Income Tax in India

Whether we like it or not, we all worry about the future and considerably make choices to save and invest money so that we can have a secure tomorrow. Consequently, a lot of what we do today help contribute to not only our growth but the country’s overall growth too.

However, don’t you think there should be some income tax benefits for seniors who’ve already given a lot in the younger days? Let’s get straight into it to talk about some of these benefits under Income Tax Benefits for Senior Citizens.

Who is considered a Senior Citizen in India??

Senior Citizen must be of the age of 60 years or above but less than 80 years at any time during the respective year

Very Senior Citizen must be of the age of 80 years or above at any time during the respective year.

    What are the Special Income Tax Benefits for Senior Citizens??

1.     Benefit of Higher Basic Exemption Limits:

We know that for ordinary individual taxpayers the basic limit for exemption, up to which he is not required to pay tax is presently Rs. 2,50,000 up to A.Y. 2021-22. However, for Senior Citizens, the basic exemption limit is fixed at a higher figure of Rs. 3,00,000. For Very Senior Citizens does not have to pay tax up to Rs. 5,00,000 of Annual total income.

Income Tax Rates for Senior and Very Senior Citizens are as under:

 2.      Benefits under Medical Insurance

Deduction in respect of a health insurance premium paid by an individual and HUF is deductible up to Rs. 25,000 and additional deduction up to Rs.25,000 for the health insurance premium paid for parents or parents of the assessee is available.

Under the above circumstances, if an assessee is a Senior or Very Senior Citizen deduction will be available up to Rs.50,000. Please remember that for claiming this deduction the health insurance premium is paid by any mode other than cash.

Over and above any medical expenditure incurred on medical treatment of specified diseases.  To claim the amount of expenditure the assessee is required to obtain the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a hematologist, an immunologist, or such other specialist, as prescribed in the amended rule 11DD(2). The allowable amount is of Rs.1,00,000.

3.      Privilege on Interest Income

The senior citizens who are residents of India will have to pay no tax on their interest earned up to Rs.50,000 in a financial year. Applicable under section 80 TTB of Income Tax, this will take into account interest earned in the savings bank account, deposits in a bank, and/or deposits in post-office.

4.      Form No 15H for Non deduction of TDS

Section 194A of the Income Tax Act 1961 gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or post office or a cooperative bank to a senior citizen up to Rs. 50,000. Therefore limit is to be computed for every bank individually. The senior citizens will have to fill the form 15H.

 5.      No Advance Tax

While ordinary individuals have to pay an advance tax if their tax liability is Rs.10,000/- or more in a financial year, senior citizens are free from this burden unless they make income from business or profession. Those not owning a business only have to pay the Self-Assessment Tax. As per Section 207, a resident senior citizen not having any income from business or profession, is not liable to pay advance tax.

6.      Standard Deductions from Pension Income

Under Section 16, Senior citizens are allowed a standard deduction of ₹50,000 on account of their pension income. 

7.      Transfer of Capital assets under ‘Reverse Mortgage Scheme’

The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain (Nor under any other head of income). A senior citizen may reverse mortgage any of his accommodation to make monthly earnings. The ownership of the property remains with the senior citizen and they are given monthly payments for it. The amount paid in installments to the owner is exempted from Income Tax. 

You may get in touch with us at sekharbabu.Busam@gmail.com  for any clarification or support on tax planning and Income tax return Filling.

How to get the expense wise split in GSTR 9C Bulk data from Tally ERP

 In GSTR 9C, we required to prepare a lot of data with respect to Input and Output Tax pertains to GSTR 3B and GSTR 1. Under GSTR 9C an expense-wise bifurcation of the Inputs availed should be mentioned under “Table 14” which requires a lot of time to prepare manually. For the first two years, they are made optional by the government.

Here is the solution for making life easy by simple steps in Tally ERP. Both the methods stated have a pre-requisite that GST Input is booked against the expense in a single Entry (things might not work if you pass two separate entries for expense booking and Input booking). The first method is much easier as no further work needs to be done in Excel.

Method 1: GSTR 3B report in Tally ERP

Tally has a feature that provides data for GSTR 3B that can be useful if you have correctly defined the voucher types. We should maintain expense category based on the voucher type.

The path for getting the GSTR 3B report from Tally ERP is “Gateway of Tally –> Display Menu –> Statutory reports –> GST Reports –> GSTR 3B”. You can change the period (F2) as required for the User.

Under the “Inward supplies” section, you can see the “purchases taxable” grouped under ‘Taxable’ head. In case you are seeing the GSTR 3B that has the same headings as that of a Return such as ‘Eligible ITC’ instead of Inward supplies, change the type of report to View Summary(Alt+V). To get more details on purchases taxable you can able to see the voucher wise Input details for the entire year. Now all you have to do is change the report type to Ledger Wise (Alt+L), here you can see the entire year’s Input broken down into the respective Ledgers. For double check, ensure cross-checking of data for sample line items. You can refer to the below picture:

Method 2: Input tax ledgers (Columnar View)

Take up the Input GST ledgers (i.e. CGST, SGST & IGST) one by one and then take a columnar report of them. For that open an Input Ledger, then change the view to Columnar (Alt+F8), and then press Ctrl+A to accept all features as it is. You can see the columnar view of each entry made with ledgers affected by them as various columns. You can use filters to display only entries having one expense and note the total of the GST amount against that. This is not so easier way to work around. Here you have to use your Experience of tally data and excel skills to get the desired output but for sure you will save a good amount of time out of it. You can refer to the below picture:   

Hope you find this article useful and for any further clarification do contact me at sekharbabu.busam@gmail.com. Do comment, in case of any mistakes or of an easier solution.

TCS on Sale of Goods from 01 October, 2020

If your total sales in the previous year (viz., FY 2019-20) is exceeding Rs.10 Crores then you are liable to collect TCS as per the provisions of Section 206C(1H) from 01 Oct, 2020.

 a.     The limit of Rs.50 lakhs needs to be considered for the whole of the financial year.

b.     If aggregate receipts from a customer has already exceeded Rs.50 Lakhs as at                               30th September, 2020, then TCS is applicable on every receipt from 1st of October, 2020.

c.     If aggregate receipts from a customer has not exceeded Rs.50 Lakhs as at                                      30th September, 2020, then TCS is applicable only after the aggregate receipts exceed               Rs. 50 Lakhs and only on the amount exceeding Rs. 50 Lakhs.

 a.     Advance received on/before 30th September 2020 and sale invoice raised on/after 1st October, 2020 as per the circular issued by the IT Department, TCS is applicable at the time of receipt. Since, advances are received prior to 1st Oct, 2020 TCS is not required to be collected.

b.     Advance Received from 1st of October, 2020, TCS is required to be collected for all the advances received from 1stOct, 2020 subject to threshold of Rs.50,00,000/-;

 k)     TCS needs to be done even if the amount receivable is adjusted against another payable or against anybody else’s account.

 l)      The system of recording and accounting sale data - party wise and PAN wise needs to  be introduced so as to be able to seamlessly get information to check the applicability or otherwise of this TCS.

 m)   Sales to multiple enterprises operated under 1 (one) PAN, generally occurring in the proprietary business scenario would have to be tracked based on PAN as well.

 n)    The new accounting system shall have focus & generate reports for the following scenarios

a.     Cases where sale value per PAN has exceeded the limit on Rs.50 lakhs as on 30th September, 2020;

b.     Cases where sale value per PAN has exceeded the limit on Rs.50 lakhs as on a particular transaction date from 1st October, 2020;

c.     Cases where advance is received at any time during the year, in respect of a customer to whom the sale made is in excess of Rs.50Lakhs and sale invoice in respect of such advance is raised after 1st October, 2020;

 We have visualized only certain scenarios that would have the applicability of TCS under Section 206C (1H). Any scenario that is unique to your business needs to be specifically addressed. Further, this is a new provision, and a lot of clarity is expected to be given by the ministry of finance or the CBDT in this regard. Our views are as per provisions as is applicable as of today.

For you to remain compliant with the provisions, so as to not attract penal provisions, you may have to change the accounting system and method for compiling the data on sales and collection of tax at source.

You may get in touch with us at RAONV2K@YAHOO.CO.IN (Cell: +91 9849025383) for any support that you require in either setting it up or reviewing the process set up by you for capturing the data in this regard.

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