Everything about section 194P

Finance act 2021 introduced a new section 194P which offers exemptions to the senior citizen from filing income tax returns. This section came into effect from 1st April 2021. Let’s discuss everything in the upcoming sections.

Section 194P

This section was introduced to provide relief to senior citizens from filing ITR. But there are many conditions that need to be fulfilled to take the benefit of this exemption.

Conditions of section 194P

• The person must be 75 years old or older.
• The person must have lived in the previous year as a ‘Resident.’
• The person solely has interest and pension income. Interest income accumulated/ received from the same bank where he receives his pension.
• The person must submit a declaration containing certain facts.
• According to the Central Government, the bank is a “specified bank.” After taking into account the deductions under Chapter VI-A and the rebate under 87A, such banks will be accountable for the TDS deduction of senior persons. After-tax deduction from this account, the person doesn’t have to file an income tax return.

Things that need to be declared

For TDS deduction, these things must be declared:

• Senior citizen’s total income
• Deductions under sections 80C to 80U and rebate available under section 87A
• Confirmation from the senior citizen that he or she only has a pension and interest income

Benefits

The regulations of section 139 (return filing) will not apply to senior citizens aged 75, and up once the specified bank as described above deducts TDS under section 194P. This means that if a bank deducts TDS under this section, the senior citizen does not need to file an ITR.

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