The Income Tax Department allows senior citizens above a certain age to not file an Income Tax Return (ITR) if they meet specific conditions outlined in the Income Tax Act of 1961. As the time for filing ITRs approaches, the government has introduced amendments to the Excel utilities for certain ITR forms.
Inside the Union Budget 2021, Finance Minister Nirmala Sitharaman stated that senior citizens whose age is more than 75 years and whose income source is only the pension and interest will be privileged from furnishing the ITR.
Having elderly members in your family who are 75 years of age or above and whose income is confined to the pension and interest from the same bank where they get their pension, then there is some relief news for them.
These senior citizens have been exempted from ITR filing via section 194P added to the Income Tax Act under the Finance Act 2021. From 1st April 2021, the same provision shall come into force.
New Section 194P of the I-T Act
Section 139 of the Income Tax Act requires the furnishing of the Income Tax Return by every person whose income exceeds the normal privileged limit. But the Union Budget 2021 used to give relief in terms of compliance burden for filing returns, exempting senior citizens whose age exceeds 75 years or age from furnishing the ITR, imposed different conditions.
Section 194P’s objective is to furnish relief for those senior citizens whose income is confined and who feel unable or uncomfortable to proceed via the typical tax filing procedure.
Certain conditions have to be fulfilled to get its advantage. The first condition is that their age must be 75 years or more, and they must be a resident of India.
Read Also: 8 Points to Check Eligibility for Income Tax Return Filing
The second condition is that their whole income is to be confined merely to the pension and interest from the bank from which they get the pension. Also, that bank must be in the category of the specified bank reported to the government.
Circumstances for Privileged Beneath Section 194P
Resident in India and of the age of 75 or more
The senior citizen is a resident in India and has exceeded the age of 75 in the past year.
No other income than Pension
The senior citizens whose pension, along with the additional income. But he or she might have the interest income from that bank where he or she is obtaining his or her pension income.
Submit the declaration, which consists of some information, to the particular bank
This bank is the designated bank. The central government will notify some banks which are banking firms to be the specified bank. He or she needed to file the declaration with the designated bank. The declarations consist of the particulars in the form and are verified in that way as might be prescribed.
Designated bank means a banking company named as an agent of the RBI under the Notification No. 98/2021 dated 2nd September 2021.
Declaration Form Must be Submitted by Senior Citizens
The designated bank will deduct TDS on the grounds of the declaration furnished by the senior citizen to the bank. The declarations must contain numerous information, such as the total income of the senior citizen, deductions claimed under sections 80C to 80U, the exemption available under section 87A, and the confirmation by a senior citizen of receiving only pension and the income from the interest.
To claim the same facility, senior citizens would be mandated to submit a declaration form (Form 12BBA) to the related bank. In this form, they shall need to furnish their PAN number, Pension Payment Order (PPO) number, total income details, the section under which deduction has been taken, information of exemption u/s 87A, and confirm that their income is restricted to pension and interest only. It is essential to provide the name of the bank and the pension-paying employer.
The bank estimates its total income (pension and interest) once the senior citizen provides this declaration to the bank. Post this, it computes the tax by considering all exemptions and deductions cited under the Income Tax Act (such as sections 80C to 80U and 87A) and deducts TDS as per that. After this, senior citizens are not required to submit the ITR.
Options are there for the tax regime. If senior citizens opt for the old tax regime, they shall need to provide evidence of their investments to the bank so that the bank can provide the precise deduction. If the new tax regime has been opted then no investment evidence is mandated since most of the exemptions are not present in the new regime.
Section 194P is a valuable provision for senior citizens who rely on pension and interest, and for whom ITR filing has become a tough procedure. Ensure to check the same facility if you have such a senior citizen in your family, it is feasible that he or she may not be required to submit the ITR anymore.
