In other words, if the yearly tax liability on pension and interest income is discharged by way of deduction of TDS by the bank, the return filing will not be an obligation for the senior citizen.
In order to ease the compliance burden on senior citizen pensioners who are of 75 years of age or above, Union Budget 2021-22 proposed to exempt them from the requirement of filing an income tax return (ITR) if the full amount of tax payable has been deducted by the paying bank.
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Naveen Wadhwa, DGM, Taxmann explains this further, "This concession from the filing of return of income will be provided only if the pension income is credited in the same bank from which the interest income is earned and the bank deducts the required tax from the sum of such income at the rates in force."
In other words, according to Wadhwa, if the yearly tax liability on pension and interest income is discharged by way of deduction of TDS by the bank, the return filing will not be an obligation for the senior citizen.
According to the newly introduced provision 194P in Finance Bill, the bank which pays the pension will compute the tax on the total income (pension and interest) after considering any deductions under Chapter VI-A.
"The bank will do the necessary TDS deductions from the pension and senior citizens aged 75 years and above will be absolved from the filing of tax returns. However, if there are any other sources of income or deductions, then such senior citizens will need to file the tax returns," states Sandeep Sehgal, director-taxes and regulatory, AKM Global, a consulting firm.
In case a senior citizen has savings accounts in more than one bank, says Gaurav Saraf, partner, VPTP Co, he/she would need to furnish the required details to the bank where he/she received the pension.
The liability of necessary tax deduction, according to Kapil Rana, founder & chairman, HostBooks, will be transferred to the paying bank that means paying bank will deduct the tax as per the slab applicable on such senior citizen after giving effect to the deduction allowable under Chapter VI-A, rebate allowable under section 87A provided such person has furnished a declaration to the specified bank containing such particulars in such form and verified in such manner as may be prescribed.
(Edited by : Jomy)
First Published: IST