Budget 2021 was presented on 01.02.2021 in the parliament. Although there was no major announcements in the Budget for common man but there was one amendment which mentioned that now senior citizen is not required to file Income tax return.
However the above relief comes with some terms and conditions. Further the above amendment has been introduced by a new section under Income tax i.e. section 194P of the Income tax act which is as under:
“194P. (1) Notwithstanding anything contained in the provisions of Chapter XVII-B, in case of a specified senior
citizen, the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force.
(2) The provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under subsection (1).
Explanation.–– For the purposes of this section,––
(a) “specified bank” means a banking company as the Central Government may, by notification in Official Gazette, specify;
(b) “specified senior citizen” means an individual, being a resident in India––
(i) who is of the age of seventy-five years or more at any time during the previous year;
(ii) who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and
(iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.’.”
Now according to above TDS section only specified senior citizen are not required to file Income tax return i.e. senior citizen of age above 75.
But this is not the only condition the other condition is that the senior citizen should be only earning pension income and interest income and both such income should come only in one bank.
Next the senior citizen should furnish a declaration to such bank about TDS deduction in above section.
Further, the bank has to calculate the income of senior citizen considering rebate, deduction etc and deduct full tax considering the tax rate in force.
Once all the above conditions are fulfilled only then the senior citizen would be eligible to not file income tax return.
Thus, even though this provision would have sounded very attractive at first but after reading all the conditions we can see that:
1. This section has introduced new type of senior citizen.
2. This section is only applicable on two types of income: pension and interest income and that too from same bank i.e. if you earn pension income in one bank and interest income in another bank this benefit won’t be available.
3. This section further increases liability on bank to deduct correct tax on income of senior citizen which increases the burden on bank.
Thus, now you need to decide whether this is a beneficial provision or not.