Jul 29, 2022
The Budget 2021 announced an exemption for senior citizens above 75 years if they meet certain eligibility criteria. In this regard, the government inserted section 194P in the Income-tax Act, 1961. The category of senior citizens who need not file ITR this year and meet the following criteria.
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The senior citizen is resident in India and is 75 years old or more during the previous year, i.e., in FY 2021-22.
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He has pension income and no other income. However, in addition to such pension income, he may also have interest income from the same bank in which he is receiving his pension income.
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The bank, in which pension and interest income is received, is a specified bank as notified by the government. Notifying the meaning of 'specified bank'. As per the notification, a senior citizen can submit the declaration to any scheduled bank.
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He shall be required to furnish a declaration to the specified bank. The declaration shall be containing such particulars, in such form and verified in such manner, as may be prescribed. These people will primarily fall into two categories: one who are required to pay no taxes and second who are required to pay taxes. In the latter case, the specified bank will deduct the taxes as per the information provided by the senior citizen.
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A senior citizen is required to furnish declaration using Form no. 12BBA. Once the declaration is submitted by the senior citizen, the bank will calculate the gross total income (pension plus interest income). The bank will also take into account the deductions, tax-exemptions and rebate u/s 87A that a senior citizen is eligible for to arrive at net taxable income. Now, the bank will deduct TDS for senior citizens after considering deductions and rebate.
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While submitting the declaration, the bank will ask the senior citizen to provide proof of deductions and tax exemptions he/she is eligible for. This will be required if he/she opts for the old income tax regime. If the senior citizen opts for the new income tax regime, then submission of investment proofs will not be required.
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The bank will issue Form 16 for the tax deducted under section 194P. Do note that this is the same TDS certificate issued by the employer to his employee for the tax deducted on the salary income.
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