Section 194P - Exemption For ITR Filing For Senior Citizens

Section 194P applies for resident senior citizens aged seventy-five years or more. This section provides a benefit to pensioners, who do not have any other income apart from bank interest from their pension money. Senior citizens aged 75 years or more do not have to file ITR, if they provide a declaration to the bank where they maintain pension account. TDS will automatically be deducted by the bank on their income, thus relieving them from the requirement of tax payment at the time of filing returns. This article explains in detail, the applicability and conditions and the benefits of section 194P.

What is Section 194P?

• Section 194P relives resident senior citizens aged 75 years or more from filing Income tax Returns, on satisfaction of certain conditions.
• Such senior citizens can have pension income, and interest earned from the bank in which pension account is maintained. He cannot have any other income to take this benefit.

Conditions for exemption under section 194P

• Senior citizens should be of age 75 years or above. 
• Senior citizens should be ‘Resident’ in the previous year. 
• He must have pension income and interest income from a bank account (savings or deposits) only. Interest income must be from the same bank in which he is receiving his pension.
• The senior citizen will submit a declaration containing some details (mentioned below) to the bank.
• This benefit can be availed only from scheduled banks. Such banks will be responsible for the TDS deduction of senior citizens after considering the deductions under Chapter VI-A and rebate under 87A. 

Once the bank deducts tax for senior citizens above 75 years of age, there will be no requirement to furnish income tax returns by senior citizens.

Filing a Declaration by a Senior Citizen

The specified bank, as mentioned above, shall deduct TDS based on a declaration submitted by the senior citizen to the bank. 
The declaration should contain the below-mentioned details :

• PAN and Pension Payment Order (PPO) Number
• Total income of the senior citizen
• Deductions availed under Section 80C to 80U
• Rebate available under section 87A
• Confirmation from the senior citizen of having only pension and interest income
• Name of the specified bank and Name of employer from which pension Is drawn

How will the Taxable Income be Calculated under Section 194P?

• A senior citizen must submit a declaration using Form No. 12BBA. 
• Once the the declaration is filed , the bank will compute the gross total income (pension plus interest income). 
• To calculate net taxable income, the bank will also consider the deductions, tax exemptions, and rebates available to elderly citizens under Section 87A. After deductions and rebates, the bank would now deduct TDS for older persons.
• The bank will request proof of deductions and tax exemptions that the senior person is entitled to when filing the declaration. If they choose the previous income tax regime, this will be required. 
• If the older citizen chooses the new income tax regime, no investment proof will be required.

Benefits to Senior Citizens under 194P

Senior citizens age of 75 years and above who receive pension income and interest income from a bank account which are the only source of income, in such case senior citizens are exempted from filing of income tax returns.

However they are supposed to fill the form 12BBA and submit to the bank. Once the Senior citizen has filed the declaration, the bank will compute the gross total income (pension plus interest income). To calculate net taxable income, the bank will also consider the deductions, tax exemptions, and rebates available to senior citizens under Section 87A. After deductions and rebates, the bank would now deduct TDS for older persons.

Download Form 12BBA

Format of Form 12BBA