On 1stFeb 2021, the Finance Minister, Nirmala Sitharaman announced Union Budget 2021. Under this budget, inserted new section 194P to give relaxation to senior citizens who are of the age of 75 years or more.
Earlier after a threshold limit senior citizen were supposed to pay taxes on their income. The senior citizen was exempt to pay tax if his income is only upto 5 lakhs. But after insertion of section 194P, senior citizens are not required to file income tax return after meeting few conditions.
To provide relaxation to senior citizens the taxpayer mandatorily required to comply with few conditions such as;
1. The age of the resident senior citizen should be at least 75 years or more.
2. The senior citizen shall receive income from only two sources such as;
- From pension, or
- From interest
3. Taxpayer shall receive interest income from the same specified bank account which he maintained for receiving pension income.
Note: The term “specified bank” means, any banking company as the Central Government may, by notification in official Gazette specify.
Procedure to claim exemption
There is no any procedure as such to claim this exemption but taxpayer requires to give one declaration. He requires to furnish a declaration to the specified bank containing such details, in such form & verified in such manner as may be prescribed.
Once, the declaration is furnished, the specified bank shall after give effect of deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant Assessment Year & deduct income tax on such total income based on rates in force.
If deductor has deducted TDS u/s 194P then only deductee will get the benefit of non-filing of ITR.
The Union Budget 2021 has taken favourable decision to give benefits to senior citizens in India. The senior citizens are exempted from filing their income tax return.