SECTION 194P EXEMPTION FROM FILING ITR FOR SENIOR CITIZEN

TDS U/S 194P: EXEMPTION FROM FILING ITR FOR SENIOR CITIZEN

1. What do you mean by TDS?

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

Note: -

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

2.  What is TDS under Section 194P of Income Tax Act?

Section 194P of Income Tax Act, 1961 was introduced to provide conditional relief to senior citizen above the age of 75 years from filing of Income Tax Returns.

3. When is TDS to be deducted under Section 194P?

TDS is required to be deducted: -

• At the time of payment.

            Or

• At the time of crediting the account of payee, whichever is earlier.

Few examples of date of deduction are: -

4. Who is required to deducts TDS under Section 194P?

Section 194P mandates that the senior citizens are not required to filed Income Tax return if the bank has deducted TDS on their income.

NOTE: -

This section i.e. TDS u/s 194P is not applicable when the senior citizen is a non-resident.

Example: -

Mr. Singh a resident of India aged 77 years has pension income of Rs 52000 per month and the same is credited to SBI bank. In addition, he gets interest @ 8% on deposits of Rs. 20 lakhs with the same bank. Out of the deposit of Rs. 20 Lakhs, Rs. 2 lakhs represent Five-year term deposit made by him. Interest on Saving bank credited to his saving account was Rs. 9500? Compute the TDS deductible by SBI bank if Mr. sharma has filed a declaration with them?

Computation of tax liability under old scheme

Computation of tax liability under new scheme (115 BAC)

Since Mr Singh liability is less under new scheme i.e. 115BAC so bank must deduct TDS under new scheme @ 2544 (approx.) per month (30,520/12).

Mr. Singh is not required to file his Income tax return as all conditions of 194P are satisfied.

5. Rate of TDS under Section 194P?

The TDS rate is determined as per the slab rate of the resident individual.

6. Conditions under Section 194P where the resident senior citizen will get exemption from filing of Income Tax Return?

• Senior citizen should be of age 75 years or more.
• Senior citizen should be ‘Resident’ in previous year.
• He must have pension income and interest income from a bank account only. Interest must be accrued / earned from the same bank in which he is receiving his pension.
• The senior citizen will submit a declaration containing some details (mentioned below) to the bank.
• The bank must be specified, a ‘specified bank’ is banking company as notified by the central government. Such bank will be responsible for TDS deductions of senior citizen after considering the deductions under Chapter VI-A and rebate under 87A.

7. Time limit for deposit of TDS under Section 194P?

The due date for deposit of TDS is as below: -

8. What is the due date for filing of TDS return under Section 194P?

TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: -

9. Type of TDS return & form to be issued?

TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

10. Fees/ Penalties for Late/ Non- Filing of TDS u/s 194P?

Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

FREQUENTLY ASKED QUESTIONS?

Q. Which tax regime will be applied wile deducting TDS u/s 194P?

A. The bank calculates the taxable income after getting the declaration from the senior citizen and applies the beneficial tax regime to the taxpayer to arrive at the TDS to be made u/s 194P.

Q. What is the age limit for 194P?

A. The age limit for relaxation of filing of ITR under Section 194P is 75 years or above.

Q. Is there any threshold under Section 194P?

A, Yes, if the income is below the basic exemption limit then TDS will not be deducted.

DECLARATION BY A SENIOR CITIZEN

The Specified bank, as mentioned above, shall deduct TDS based on a declaration submitted by the senior citizen to the bank.

The declaration should contain the below- mentioned details:

• PAN and Pension Payout Order (PPO) number.
• Total income of the senior citizen.
• Deduction availed under Section 80C to 80U.
• Rebate available under Section 87A.
• Confirmation from the senior citizen of having only pension and interest income.