Section 194P- Exemption for filing ITR for senior citizens

As per Finance Act 2021, a new section 194P is introduced which offered situations for exempting senior citizens from Income Tax returns filing aged 75 years and above. This new Section 194P will become into effect from 1st April 2021.

Section 194P-

TDS Section 194P was introduced in Budget 2021 to offer conditional relief to the senior citizen above the age of 75 years from the Income-tax return filing.

Section 139 of the Income Tax Act rules the income tax returns filed by every individual with their income above the basic exemption limit.

Whereas, Union Budget 2021 in case to offer relaxation in terms of compliance load for returns filing, exempted senior citizens above 75 years of age from the income tax return filing, concern to the following situation.

Exemption Conditions as per section 194P-

• Senior citizens would be of age 75 years or above.
• Senior citizens must be ‘Resident’ in the prior year.
• They have pension earned income and interest received income only. Interest income accrued/ earned from the same specified bank in which they are receiving their pension.
• The senior citizen should submit a declaration describing some information (stated below) to the specified bank.
• The bank is a ‘specified bank’ as specified by the Central Government. Such banks would be liable for the TDS deduction of senior citizens after taking the deductions under Chapter VI-A, and rebate under 87A as per income tax provisions.
• Once the notified bank, as mentioned prior, deducts tax for senior citizens above 75 years of age, there would be no need to file income tax returns by senior citizens.

Declaration Filing by a senior citizen

The notified bank as stated above shall deduct TDS on the basis of a submitted declaration through the senior citizen in the bank.

A declaration must state the below-mentioned pieces of information:

• Full Income of a senior citizen.
• Availed Deductions as per section 80C to 80U as per IT Act,1961.
• Available rebate as per section 87A as per IT Act,1961.
• Exact confirmation from senior citizens of having their only pension and interest income.

The Advantage to the senior citizen under 194P

Once the notified bank as stated above deducts TDS as per section 194P, the laws of section 139 (return filing) of IT Act, 1961 would not apply to senior citizens aged 75 years and above. This refers that if the notified bank deducts TDS as per this section, then the senior citizen requires not to file their ITR.