Samyuktha, who turned 60 in August 2019, is a teacher by profession. She retired from her employment in 2018. Her source of income includes pension (Rs. 3.5 Lacs) and interest income from fixed deposits with Banks (Rs. 1.8 Lacs). Hearing about the Bank scams in the recent past made her become more cautious. She had split her deposits with one nationalised bank as deposits in four different banks. None of the banks had deducted TDS on the interest credited to her accounts. With her pension income, she had invested Rs. 1.5 Lacs in PPF. Samyuktha is of the view that she would qualify as a “senior citizen” as per the Income Tax Act and hence she feels that it’s ok if she does not file her Income Tax returns for FY 2019-20 (AY 2020-21). Is she correct?
SENIOR CITIZEN:
If a person is of 60 years of age or more anytime during the previous year, he/she will be a senior citizen as per the provisions of the Income Tax Act. Therefore, Samyuktha is correct in her understanding that she qualifies as a “senior citizen”.
MEANING OF TOTAL INCOME:
Every person whose total income exceeds the maximum amount not chargeable to tax is required to file his return of income u/s Sec 139(1) of the Income Tax Act. “Total income” here refers to the gross total income before considering deductions under chapter VI A. Samyuktha’s income before considering investment in PPF (u/s 80C of the Income Tax Act) and other deductions under chapter VI A crosses Rs. 3 Lacs and hence, she is liable to file her return of income.
DEDUCTION FOR INTEREST INCOME:
The other Chapter VI A deduction that Samyuktha can consider while preparing the return of income is Sec 80TTB. This section is applicable only for Senior and Super Senior citizens. It allows a deduction of upto Rs. 50K in a FY for interest earned on fixed deposits with Banks, Post office etc.
NON-DEDUCTION OF TDS MEANS NOT REQUIRED TO FILE ITR?
Sec 194A of the Income Tax Act deals with TDS on interest, other than interest on securities. Interest on fixed deposits will be covered under this section. The threshold limit specified in the section for TDS deduction in case of senior citizens is Rs. 50K in a FY. Hence none of the banks would have deducted TDS from interest income credited to Samyuktha’s account if it did not cross the 50K limit in FY 2019-20. But non deduction of TDS should not be taken as a deciding factor for filing the return of income.
WILL NON PAYMENT ADVANCE TAX AND NON DEDUCTION OF TDS RESULT IN ADDITONAL INTEREST?
Generally, if advance tax is not paid or if no TDS is deducted, an interest u/s 234B & 234C shall be charged on the tax liability for non-payment / belated payment of advance tax. In many circumstances this comes up as a surprise element for the tax payer. Advance tax provisions do not apply to senior citizens who do not have business income. Hence Sec 234B & 234C will not apply for Samyuktha.
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