Non-salaried senior citizen, tax exemption, income on intere

That is because tds is deducted at flat rate of 10% and not as per slab rates. Whereas income tax of an individual is levied as per slab rates. Also if the gross income exceeds the basic exemption limit (for ay 2015-16 it is 250000, ay 2014-15 it is 200000 and for ay 2013-14 it is 200000) then return is mandatorily required to be filed irrespective whether tax is paid or not.

Slab rates for ay 2015-16

Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)

Education Cess : 3% of the total of Income Tax and Surcharge. 

No rebate if income exceeds 500000/-

Slab rates for ay 2014-15

Slab rates for Ay 2013-14 

She can claim deductions u/c VIA from gross total income.up to ay 2014-15, it was 100000 and for ay 2015-16, it is 150000 for 80c and if any mediclaim is paid then up to 15000 deduction on it can be availed.

Hence the claim made by it dept might be correct. I mean depending after claiming the deductions if made any

The tax can be reduced by claiming relevant deductions but cannot be eliminated completely as income earned is substantial

yes you have to give ta anyways, advance tax planning will help in tax saving. Once the year has passed no tax saving instruments will help.

Maybe u can gift this amount to wife/husband and let them reinvest this.saves 3 lakhs for every person u split the income.

@ Ubaid:

The question here is she has already earned that income. And there is a tax demand. How can that amt be shown as a gift.?

Kindly elaborate your suggestion? And wrt what have you given such suggestion.? Also if any amount gifted between spouse, such income would attract clubbing provisions. 

You cannot do tax planning after you have earned the said interest income.

i saw your suggestion above. i had nothing more to add to that.

i gave my suggestion for future years.

and i know clubbing provision will apply if he gifts it. it wont apply in the case of reinvestment though

@ Ubaid:

One kind advise - Please at least mention that the suggestion you provided is relevant for future years and not relevant in the current scenario, as the person is asking the suggestion based on current scenario and might take your suggestion in the present case itself.

Also wrt clubbing provisions, 

Only income earned from earned income will not be clubbed. Not the entire amt reinvested.I.e where entire amt is reinvested clubbing provisions still attracts.

Let's consider an example where you invest Rs 10 lakhs in your wife's name and earn an interest of Rs 100,000. This Rs. 100,000 will be clubbed in your income for the computation of income tax; however, when your wife further invests this Rs 100,000 in another FD and earns Rs 10,000 (10% interest on Rs 100,000) as interest on it, this interest will be considered as her own income only and will not be clubbed with your income.

But say if your wife further reinvested 1100,000 in FD @ 10% then prorata income will be clubbed I.e Out of 110,000, 100, 000 will be clubbed in your hands and 10,000 will be taxed as your wife's income.

Clubbing provisions will also not apply when the gifted money is invested in any investment option which is tax exempt, for instance in the above example, let's say rather than a FD you would have invested the same Rs 10 lakh for buying shares of a listed company in your wife's name. You later sold the shares for Rs 12 lakhs after holding it for a period of one year and earned a capital gain of Rs 2 lakh which ultimately is tax free as long term capital gains are tax exempt. Hence this Rs 2 lakh capital gain income in your wife's name will not be clubbed in your hand as either ways it is tax free. The earlier rule will also prevail when this gain of Rs  2 lakh is further invested by your wife in any investment option and the income earned from it will always be clubbed in her name only.

Hope you get what I m trying to explain?

yes i understand.