Deduction of Tax in Case of Specified Senior Citizen | Section 194P

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The provisions of section 194P (inserted with effect from April 1, 2021) are given below –

• • Specified senior citizen – Under section 194P, tax is deductible only in the case of “specified senior citizen”. For this purpose, specified senior citizen is an individual who satisfies the following conditions –

1. 1. 1. He is a resident individual.
      2. He is 75 years or more at any time during the previous year (for the previous year 2022-23, a resident individual shall be treated as “specified senior citizen” only if he was born before April 2, 1948).
      3. He has income from pension which is credited in his pension account with “specified bank”.
      4. He has no other income except interest received/receivable from any account maintained by such individual in the same “specified bank” in which he gets pension income.
      5. He shall be required to furnish a declaration to the “specified bank”. The declaration shall contain such particulars, in such form and verified in such manner, as may be prescribed.

• • Specified bank – “Specified bank” means a banking company as notified by the Central Government†.
  • Tax deduction by specified bank – Once the declaration is furnished by the specified senior citizen, the specified bank would be required to compute the income of such senior citizen. For computing total income, deduction under sections 80C to 80U should be given along with rebate under section 87A. The specified bank shall deduct income-tax on such total income on the basis of rates in force. For calculating tax liability, normal tax rates are applicable. Section 194P is applicable even if deductee has opted for the alternative tax regime under section 115BAC.
  • At what time tax is deductible by specified bank – It is not given in section 194P.
  • Return under section 139(1) not required – The provisions pertaining to submission of return of income under section 139, shall not apply to the specified senior citizen for the assessment year relevant to the previous year in which tax is deducted under section 194P.

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†As per Notification No. S.O. 3595(E), dated September 2, 2021, “specified bank” means a banking company which is a scheduled bank and has been appointed as agents of RBI under section 45 of the Reserve Bank of India Act.