Income Tax Query

TDS in case of specified senior citizens: Section 194P  

The Finance Act, 2021, inserted a new section 194P in the Income Tax Act effective from 01.04.2021 so as to provide certain relaxation in tax compliances in case of senior citizens. There will not be any requirement of furnishing the return of income in case of specified senior citizens, provided they adhere to the conditions specified under Section 194P so as to enable the specified bank to calculate the income of the senior citizen and deduct tax on the same. 


Conditions to be satisfied: 

1.           The senior citizen is a resident in India. 

2.           The senior citizen is aged 75 or more. 

3.           The senior citizen has only pension income and no other income. However, in addition to such pension, he may also have interest income from the same bank in which he is receiving his pension income. 

4.           The bank is a specified bank notified by the Government. 

-The CBDT, vide Notification No.98/2021 dated 02.09.2021, notified specified bank to mean a banking company which is a scheduled bank and has been appointed as agents of Reserve Bank of India under Section 45 of the RBI Act, 1934. 

5.           The senior citizen claiming benefit shall be required to furnish a declaration to the specified bank. The declaration shall be containing such particulars, in such form and verified in such manner, as may be prescribed.  

-The declaration required to be furnished shall be in Form 12BBA under Rule 26D of the Income Tax Rules. 

-Form 12BBA requires information relating to the specified senior citizen like name and address, PAN or Aadhar, previous year, date of birth, name of the specified bank, name of employer from whom pension is drawn, pension payment order (PPO) number etc. 


Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the deductions allowable under Chapter VI-A and rebate allowable under Section 87A of the Income Tax Act, and deduct tax at source based on the rates in force for the relevant assessment year. 


Quarterly statement for TDS deducted under Section 194P shall be in Form No.24Q. 


The deduction allowable under Chapter VI-A shall be given based on the evidence furnished by the specified senior citizen during the previous year. This evidence shall be properly maintained by the specified bank and shall be made available to the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax as and when required.