The 2021-22 Budget had introduced a provision for exempting senior citizens of 75 years and above having pension income and interest from fixed deposit in the same bank from filing income tax returns for the financial year beginning April 1.
The Central Board of Direct Taxes (CBDT) has now notified rules and declaration forms which senior citizens would have to file with the specified bank who in turn would deduct tax on pension and interest income and deposit with the government.
The Income-tax (26th Amendment) Rules notified by CBDT shows the manner of making a declaration to the bank by a senior citizen eligible for the relief. The relaxation from filing tax returns is available to those above this age and having pension income and interest income in the same bank and gives a declaration to the bank.
This new relaxation was announced by finance minister Nirmala Sitharaman during the Union Budget 2021. “In the 75th year of Independence of our country, the government shall reduce compliance burden on senior citizens who are 75 years of age and above,” she said.
“For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income,” finance minister further added.
The government has now brought out rules and the forms which senior citizens would have to file with their bank who in turn would deduct tax on pension and interest income and deposit with the government.
The interest income has to be earned in the same bank account in which the pension is received. Income Tax Act section 139 relating to return filing obligation will not apply in these cases.
It must be noted that the senior citizens who are above 75 years age, are not exempted from paying tax but only from filing income tax return (ITR) if they are eligible to certain conditions. The exemption from filing income tax returns would be available only in case where the interest income is earned in the same bank where pension is deposited.
