No TDS u/s 194A for Income upto 50,000 in the case of Senior Citizens: CBDT Clarification

No TDS u/s 194A for Income upto 50,000 in the case of Senior Citizens: CBDT Clarification

CBDT has clarified/ reiterated that in the case of senior citizens, no tax (TDS) is required to be ‘deducted at source’ under Section 194A, where the amount of such income (credited or paid) during the financial year does not exceed Rs. 50,000/- (Rupees fifty thousand) in aggregate.

This clarification should be treated as an Advisory from CBDT for the Banks to stay away from making unnecessary deduction of tax at source (TDS) u/s 194A in the case of senior citizens, i.e. where aggregate income is upto or below Rs. 50,000 during a financial year. It is expected that Banks will follow these guidelines so that senior citizens do not face any difficulty in getting TDS free full income in their hands.

CBDT (Systems) Notification No. 06/2018 Income Tax dt. 6 Dec. 2018

1. It has been brought to the notice of CBDT that in case of Senior Citizens, some TDS deductors/ Banks are making TDS deductions even when the amount of income does not exceed fifty thousand rupees. The same is not in accordance with the law as the Income-tax Act provides that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. (Please refer to the third proviso to sub-section 3 of section 194A).

2. Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.

3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby clarifies that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees.

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