ITR filing exemption for Senior Citizens (75 or above) proposed in Budget 2021

ITR filing exemption has been proposed in Budget 2021 for Senior Citizens (age 75 years or more) having only pension/ interest income, to reduce their compliance burden. In such cases, the banks paying such pension/ interest will be responsible to deduct necessary tax at source (TDS) on their income.

In order to ease compliance burden on senior citizen pensioners who are of 75 years of age or above, it is proposed in the Budget 2021 to exempt them from the requirement of filing of income tax return if the full amount of tax payable has been deducted by the paying bank. This exemption is proposed to be made available to such senior citizens who have only interest income apart from the pension income.

Accordingly, Clause 47 of the Finance Bill 2021 has proposed to insert a new Section 194P of the Income-tax Act, relating to deduction of tax in case of specified senior citizen, with effect from 01/04/2021.

Section 194P(1) seeks to provide that 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.

Section 194P(2) seeks to provide that 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 to Section 194P seeks to define the following expressions:

(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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