The Income Tax Act requires individuals to file income tax returns if their income exceeds the threshold limit. The basic exemption limit for senior citizens above 60 years and below 80 years is Rs 3 lakh. For super senior citizens, i.e. above 80 years of age, the basic exemption limit is Rs 5 lakh. However, in Budget 2021, the Finance Minister had announced relief to senior citizens, who satisfy certain conditions, from filing the income tax return. The CBDT has released a notification and prescribed rules requiring senior citizens to submit a declaration in Form 12BBA to avail of the benefit.
Section 194P is the provision that specifies the conditions for exemption from filing the income tax return by senior citizens. The requirements for exemption under Section 194P are:
- The senior citizens should be 75 years of age or above.
- The senior citizens’ residential status should be ‘Resident’ in the relevant financial year.
- They receive only the pension and interest income.
- They should receive the interest income from the same bank (specified bank) from where the pension is received.
- The senior citizen must declare in Form 12BBA to the specified bank as per the prescribed income tax rules.
Form 12BBA needs to be furnished by eligible senior citizens in paper form to declare to the specified banks.
The Form 12BBA requires the person to fill in his basic details, such as name, address, PAN/Aadhaar, previous year, date of birth, name of the specified bank, name of the employer (pension), and Pension Payment Order (PPO) number. Apart from these details, the senior citizen must confirm that he does not earn any other income other than the pension and interest income from the same bank.
The rule also requires the senior citizens to furnish evidence of Chapter VI-A deductions, i.e. deduction under Section 80C, 80G, etc., to the specified banks.
On receiving the declaration, the specified banks will compute the taxable income after considering the deduction under Chapter VI-A and rebate under Section 87A. The specified banks must deduct tax (TDS) based on the income tax slab rates applicable to the person for the relevant financial year.
The relief is applicable for the income tax returns of the financial year 2021-22 and onwards.