Are you a Senior Citizen? know the benefits of section 194P under Income Tax Act

Last Updated On: July 15, 2021, 5:22 p.m.
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SECTION 194P- TAX DEDUCTION IN CASE OF SPECIFIED SENIOR CITIZEN

Finance Act 2021 inserted a new section 194P which provided conditions for exempting senior citizens from filing Income Tax returns aged 75 years and above. New Section 194P will become applicable from 1st April 2021. 

 

What is Section 194P?

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

 

  • Section 139 of the Income Tax Act governs the filing of income tax returns by every individual with income above the basic exemption limit.


 

Meaning of term ‘specified senior citizen’ and ‘specified bank’

Before going through and understanding the provisions of section 194P, it is important to understand the following two terms-

1. Specified senior citizen –

The person will qualify as a ‘specified senior citizen’ if it satisfies the following conditions-

  • The senior citizen should be of the age 75 years or more during the previous year.
  • The senior citizen should be resident in India.
  • The senior citizen should be receiving only two incomes i.e., –
  • Pension income; and
  • Interest income receivable from the specified bank from which he is receiving the pension income.
  • Condition 4 – The senior citizen has furnished a required declaration to the specified bank.

2. Specified bank –

A specified bank means a bank as notified by the Central Government.

Benefit available to specified senior citizen under section 194P

Once the tax is deducted by the specified bank under section 194P, the provisions of section 139 will not apply to the senior citizen.

In nut-shell, such senior citizens are not required to furnish their income tax return.

 

Filing of the declaration-

As seen above, TDS would be deducted by the specified bank on the basis of the declaration filed by the specified senior citizen. The declaration would condition details like-

  • Total income;
  • Details of deduction available under section 80C to section 80U;
  • Rebate available under section 87A;
  • Declaration confirming receipt of only pension income and interest income.
  • However, it is important to note here that the form and manner of submission of declaration are not yet prescribed.

 

Applicability Date of Section 194P:

The provisions of section 194P of the Income Tax Act are effective from 1st April 2021.

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