Ananthasayanam is a 78 year old retired bank officer, who receives pension in an SB account held with a nationalised bank. Based on advise from his children, he had opened another savings bank account with a private sector bank a few years back to take advantage of a good net banking and mobile banking facility. He has no other income apart from his pension and interest on savings bank accounts. News on Budget 2021 specified that a new provision was proposed to exempt senior citizens who were 75 years or above from filing Income Tax Returns if they had only pension and interest income. Will Mr. Ananthasayanam benefit from this new provision?
Finance Bill 2021 proposes to introduce a new provision, which will exempt senior citizens of 75 years or more from filing income tax returns if such senior citizens’ only sources of income are pension and interest. If we get into the fine print, there is more to this new provision than what a layman perceives.
What are the conditions specified for a senior citizen to get the benefit of not filing ITR?
- The Citizen is resident in India
- Age is 75 years or more during the previous year
- He/She has only pension income
- In addition, he may also receive interest income from the same bank in which he is receiving his pension income
- The Bank in which he/she receives such pension and interest income must be a bank which is specified by the Government in a notification
- He/She should furnish a declaration to the specified bank containing details as may be prescribed.
Onus on bank to deduct to TDS
Once the specified banks receives such a declaration from the senior citizen, it is expected to compute total income of the senior citizen after giving effect to Chapter VI-A deductions and other provisions of the Income Tax Act. Based on this the Specified Bank will be required to deduct income tax at source i.e. TDS u/s 194P (newly inserted in Finance Bill 2021) on the basis of rates in force.
To conclude, Mr.Ananthasayanam will not be exempt from filing ITR as he will not fulfil the conditions specified for the same.
How can we help you?
Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.
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