As per the announcement in Budget 2021, the new section 194P of the Income Tax Act will provide conditional relaxation for senior citizens who are aged 75 or above 75 years. Here in this post, we will understand, how the Income Tax Act will provide, senior citizen exemption from filing of return.
Section 194P of the Income Tax Act
In order to provide relief to senior citizens again who are the age of 75 years or above, it is proposed to provide a section 194P, which also reduces compliance for the senior citizens.
As per section 194P, senior citizens who are the age of 75 years or above, and only have pension and interest as a source of income will be exempted from filing the tax returns.
Senior Citizen Exemption From Filing of Return
As per the rich cultural heritage of the country, elders are always respected. They are taken care of in old age with special care. Likewise, the central government is working to keep the culture and moral values intact by offering special Income Tax Benefits to senior citizens.
During her budget speech, FM Said, “In the 75th year of Independence of our country, the government shall reduce the compliance burden on senior citizens who are 75 years of age and above.”
Section 194P provides relaxation from filing Income Tax Return if the following conditions are satisfied-
🎯 The senior citizen is resident in India and of the age of 75 or more during the previous year.
🎯 He has pension income and no other income. However, in addition to such pension Income, he may also have interest Income from the same bank in which he is receiving his pension income.
🎯 This bank is the specified bank, for this purpose government will be notified few banks.
🎯 He shall be required to furnish a declaration to the specified bank, with the required details.
Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the declaration allowable under chapter VI-A and rebate allowance u/s 87A of the act, for the relevant assessment year and deduct Income Tax on the basis of rates in force.
Once it is done, there will not be any requirement of furnishing return of income by such senior citizen for that assessment year.
Section 194P of the Income Tax Act will take effect from 1st April 2021.
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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.
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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)