A senior citizen with only pension income is not required to file an income tax return (ITR) even if the earnings exceed the exempted limit and tax is to be paid. Under Section 194P, passed in 2021 under the Income-tax Act, 1961, those aged 75 and above are not required to file an ITR provided there is no other income source except pension. To avail of this exemption, a senior citizen must file a declaration on Form 12BBA to the bank to which the pension is credited.
What Is Section 194P?
Section 194P of the Income-tax Act, 1961, provides relief to seniors from
filing ITR under the following conditions:
- The person should be 75 years of age or above.
- Such a person should be a resident Indian in the previous year.
- The person must have only pension and interest income credited in the same bank.
- They must submit a declaration on Form 12BBA to the bank stating no other income besides pension.
- It must be a government designated bank which carries out the formalities, such as deduct TDS under VI-A, or consider rebate under Section 87A.
- As banks deduct TDS, seniors do not need to file ITRs; Form 12BBA is sufficient.
ALSO READ: ITR Filing: Things Senior Citizens Should Know Before Submitting Income Tax Returns While Section 194P deals with ITR filing, Section 87A is for tax rebates where income is less than Rs 5 lakh. In the new tax regime, the rebate is limited to Rs 25,000. Senior citizens can select the new regime if their income does not exceed Rs 7 lakh, where there is a
tax rebate.
How To Submit Form 12BBA To A Specified Bank?
When a senior citizen submits the declaration form, the bank calculates the customer’s gross income from its records (pension and interest). Then, it computes the deductions, rebates, and exemptions available before deducting TDS or tax deducted at source accordingly. ALSO READ: How Does Taxable Income Be Calculated For Seniors Seeking Exemption From ITR Filing? The bank will also ask the customer about the chosen tax regime. If it is the old tax regime, they must produce proof of investments and deductions; in the new regime, no such document will be asked if the income does not exceed Rs 7 lakh. Once this process is completed, Section 139, which mandates one to file an ITR, will not apply to senior citizens..
