New Section 194P on relaxation from filing of ITRs
Overview of section 194P on relaxation from filing of ITRs.
- Section 139 of the Income Tax Act provides that every person being an individual shall furnish a return of his income if his gross total income during the previous year exceeded the basic exemption limit.
- Section 194P of Income Tax Act was implemented in order to provide relief to senior citizens to decrease compliance of filing of ITR. In Budget 2021, Section 194P on Income Tax has been introduced to provide seniors over 75 with conditional relaxation from filing ITRs.
- According to the Section 194P of Income Tax Act, in the case of a specified senior citizen above the age of 75 years, the specified bank will be responsible for the TDS deduction of such senior citizens after considering the deductions under Chapter VI-A and rebate u/s 87A provisions of Income tax act..
- But, in case senior citizen has income other than interest & pension, Senior citizen will not be qualify for section 139P provision & would be needed to submit their ITR according to the normal provisions of Income tax act..
Basic Prerequisite Conditions for under section 194P Exemption under the income tax
- Senior citizens should be ‘Resident’ in the PY. He must be of age 75 years or above.
- The Senior citizens has interest income and pension income only. Interest income earned or accrued from the same prescribed bank. in which he is receiving Senior citizens pension.
- He will file a income tax declaration containing few information & details to the prescribed bank.
- Bank is a ‘prescribed bank’ as notified by the Govt. these prescribed banks will be required to be for the Tax deduction at source deduction of senior citizens after considering the deductions under income tax Chapter VI-A & rebate U/s 87A of income tax act
- Once the prescribed bank, as above, Tax deduction at source deduction for senior citizens more than 75 years of age, there will be no needed to file ITR by senior citizens.
- The provisions are not applicable to non-residents.
- Interest income has to be accrued/ earned from the same specified bank in which they are receiving their pension income.
Senior Citizen Should Submit a Declaration section 194P Exemption
- Based on a declaration submitted by the senior citizen to the bank, Tax deduction at source will be withheld by the aforementioned or the designated institutions.
- Additionally, the Declaration section 194P Exemption should include the information below or below:
- total income made by Senior Citizen during the relevant FY.
- Sections 80C through 80U of the Income Tax Act’s available deductions
- Refund that will be made available under a particular section of the Income Tax Act, portion 87A
- Confirmation from the Senior Citizen that their pension and interest are their only sources of income.
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