Section 194P

A new section 194p of income tax act was included by Finance Act of 2021, outlining requirements for senior persons 75 years of age & older to be excluded from filing income tax returns. new Section 194P will take effect on April 1, 2021.

What Is Section 194P Of Income Tax Act?

In Budget 2021, Section 194P of Income-tax Act, 1961 was inserted to grant senior persons over 75 years of age conditional respite from filing income tax returns.
Every person whose income above basic exemption limit is required to file income tax returns under Section 139 of Income Tax Act.

Applicability Of Section 194P

A "specified senior citizen" is defined as someone who, at any point in previous year, turned 75 years of age or older for purposes of Section 194P. 

• They ought to have been "Resident of India" year before. 
• Aside from interest & pension income, they do not have any other sources of income.
• Interest received or accrued from same designated bank where their pension is being paid.
   

Key Features Of Section 194P Of Income Tax Act

Key features of Section 194P of Indian Income Tax Act. This section was introduced in Finance Act 2021 to provide conditional relief to senior citizens aged 75 years & above from filing income tax returns. Here are details:

Eligibility Criteria:

Senior citizens must be 75 years or older.
They should be residents in previous year.
Their income should consist solely of pension & interest.

Interest Income:

Interest income must be accrued or earned from same bank where senior citizen receives their pension.

Declaration Submission:

Senior citizens need to submit declaration to bank containing following details:
PAN (Permanent Account Number) & Pension Payment Order (PPO) Number

Total income:

Deductions availed under Sections 80C to 80U
Rebate available under Section 87A
Confirmation that they have only pension & interest income.

Specified Banks:

Bank must be specified bank, which is banking company notified by Central Government.
These specified banks are responsible for TDS (Tax Deducted at Source) deduction for senior citizens above 75 years of age.

No Need to File Returns:

Once specified bank deducts tax, senior citizens are exempted from filing income tax returns.

Benefits For Senior Citizens Under Section 194P

 Designated bank computes net taxable income, deducts computed tax in form of TDS under section 194P, & submits results to government after gathering deduction information. TDS amount, like any other TDS amount, will appear in Form 26AS. 

Senior people 75 years of age & above will then be exempt from section 139's requirements for return filing. This implies that senior citizen is exempt from filing ITR if designated bank deducts TDS in accordance with this clause. These taxpayers will find this to be relief.
 

Exemptions Under Section 194P

• Senior people must be 75 years of age or older. 
• Older citizens ought to have been "Resident" year before. 
• He can only receive his pension & interest from savings or deposits in bank account. bank from which he receives his pension is source of all interest income.
• Older citizen will provide bank with declaration that includes information listed below.
• A "specified bank" is financial institution that has been designated by Central Government. bank needs to be specified. Following consideration of deductions under Chapter VI-A & rebate under 87A, these banks will be in charge of TDS deduction for elderly residents. 

Seniors over 75 will not need to provide income tax returns once designated bank, as previously noted, begins to deduct taxes for them.

Penalties For Non-Compliance With Section 194P

Section 194P of Income Tax Act, 1961, aims to simplify tax compliance process for senior citizens who are 75 years or older & have income from pension.

Penalties for Non-Compliance:

Banks failing to deduct TDS or maintain records of declarations can be penalized under Income Tax Act, 19611.
Remember, this provision simplifies tax compliance for senior citizens while ensuring proper tax collection.

Conclusion

Section 194P, introduced in Budget 2021, offers significant income tax relief for senior citizens aged 75 & above. Under this provision, eligible seniors with only pension & interest income can benefit from simplified tax filing procedures. Specifically, they are exempt from filing income tax returns (ITR), as bank deducts applicable taxes. This section ensures senior citizen tax deduction & streamlines compliance requirements under Indian tax laws for aged taxpayers. initiative reflects thoughtful income tax provisions for elderly individuals, enhancing their financial ease & compliance.