Section 194P tax deduction in case of specified senior citizen
As per the rich cultural heritage of our country, the elderly are always respected. They are taken care of in their old age with love and nurture. Likewise, the central government is functioning to maintain the culture and moral values intact by offering special tax benefits to our senior citizens.
To supply relief to senior citizens again who are the age of 75 years or above, the Government proposed to add a new provision 194P in the Income Tax Act, which also reduces compliance for the senior citizens.
As per section 194P, senior citizens who are the age of 75 years or above, and only have pension and interest as a source of income are going to be exempted from filing the tax returns. Section 194P to the tax Act, 1961 is inserted vide the Finance Act, 2021. Provisions of section 194P provide conditional relaxation to the senior citizens of specified nature from the filing of Income Tax Return.
- Explanation of the term ‘specified senior citizen’ and the ‘specified bank’
Before understanding the provisions of section 194P, it's important to know the subsequent two terms-
- Specified senior citizen – The person will qualify as a ‘specified senior citizen if he/she satisfies the subsequent conditions:
- Condition 1 – The person should be of the age 75 years or more during the previous year.
- Condition 2 – The person should be resident in India.
- Condition 3 – The person should be receiving only two incomes i.e.,
- 1. Pension income; and
. Interest income receivable from the required bank from which he's receiving the pension income.
- Condition 4 – The oldster has furnished a required declaration to the required bank.
- Specified bank – A specified bank is such a bank that is notified by the Central Government.
- Basic understanding of section 194P of the tax Act
Provisions of section 194P states as under-
- TDS under section 194P is deductible only within the case of the ‘specified senior citizen’.
- The specified person is required to submit a declaration containing income details.
- Based on the declaration, the required bank will-
- Compute the entire income of the required person after giving the effect of deduction available under section 80C to section 80U and rebate admissible under section 87A of the Tax Act; and
- Deduct appropriate tax on such total income of the senior citizen.
- Benefit available to senior citizens under section 194P-
Once the tax is deducted by the required bank under section 194P, the provisions of section 139 won't apply to the senior persons.
In nutshell, such senior citizens aren't required to furnish their tax returns.
- Filing of the declaration-
As seen above, TDS would be deducted by the required bank on the ground of the declaration filed by the required person. The declaration would condition details like-
- Total income;
- Details of inference obtainable under segment 80C to segment 80U;
- Rebate available under section 87A;
- Declaration confirming receipt of only pension income and interest income.
- However, it's important to notice here that the shape and manner of submission of the declaration aren't yet prescribed.
The effective date of section 194P
The provisions of section 194P of the tax Act are effective from 1st April 2021.
- Conditions to Section 194P
- Section 194 exempted senior citizens of 75 years aged or more from filing the tax return, subject to the subsequent conditions:
- Senior citizens should be aged 75 years or above.
- Senior citizens should be ‘Resident of India’ within the previous year.
- There is no other source of income other than pension income and interest income.
- Interest income accrued/ earned from an equivalent specified bank during which he's receiving his pension.
- The senior person will declare to its bank containing details of Chapter VI-A deductions and rebate allowable under 87A.
- Also, they need to declare that they have not earned the other income except pension and interest income.
- The bank may be a ‘specified bank’ as notified by the Central Government. Such banks are going to be liable for the TDS deduction of senior citizens after considering the deductions under Chapter VI-A and rebate under 87A.
If all circumstances are content, there will not be any obligation of supplying reappearance of revenue by such senior residents.
Footnotes:
https://incometaxindia.gov.in
https://newtaxroute.com
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or
Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In
The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related
Laws Being Force In India, For The Time Being. Further, despite all efforts that have been
made to ensure the accuracy and correctness of the information published, White Code Legal
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