Finance Act, 2021 has inserted section 194P which is applicable from AY 2021-22 under the Income-tax Act, 1961 and object of this new section is to give relief to senior citizen having age of 75 years or more during the previous year from return filing requirement therefore reduction in compliance burden for them.
Section 194P overrides chapter XVII-B (related to tax deduction) and according to this section following is specified senior citizen
1. Specified senior citizen means an individual resident in India i.e. resident individual .
(i) Whose age is 75 years or more
(ii) Who has only pension income and he can also have interest income from the same bank account in which he receives pension
(iii) Who has furnished declaration to the specified bank in prescribed form
Section 194P gives power to Central Government to specify banking company who shall be specified bank for section 194P
Tax deducted by specified bank must be equal to tax liability of specified senior citizen which must be computed after taking deductions under chapter VI-A and rebate of section 87A.
Section 194P(2) has exempted specified senior citizen as covered by section 194P(1) from return filing requirement
TEXT OF SECTION 194P OF THE INCOME-TAX ACT, 1961
(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 sub-section (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.
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