Amended and updated notes on section 194P of Income Tax Act 1961 as inserted by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction of tax in case of specified senior citizen.
Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961-2021 deals with the provisions related to collection and recovery of tax. Section 194P of IT Act 1961 provides for deduction of tax in case of specified senior citizen.
Recently, we have discussed in detail section 194-O (Payment of certain sums by e-commerce operator to e-commerce participant) of IT Act 1961. Today, we learn the provisions of section 194P of Income-tax Act 1961. The amended provision of section 194P is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 194P of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-194P: Deduction of tax in case of specified senior citizen
[Section 194P newly inserted w.e.f. 1-April-2021 by the Finance Act 2021]
Section 194P(1) of Income Tax Act
Notwithstanding anything contained in the provisions of Chapter XVII-B, in case of a specified senior citizen, the specified bank shall, after giving effect to the 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 and deduct income-tax on such total income on the basis of the rates in force.
Section 194P(2) of Income Tax Act
The provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1).
Explanation: For the purposes of this section, –
(a) “specified bank” means a banking company as the Central Government may, by notification in Official Gazette, specify;
(b) “specified senior citizen” means an individual, being a resident in India –
- (i) who is of the age of seventy-five years or more at any time during the previous year;
- (ii) who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and
- (iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.
The Income-tax (26th Amendment) Rules, 2021
Rule-26D inserted in the Income-tax Rules, 1962 w.e.f. 02.09.2021 by the Income-tax (26th Amendment) Rules, 2021 vide Notification No. 99 /2021, G.S.R. 612(E) dated the 2nd September, 2021.
Rule-26D: Furnishing of declaration and evidence of claims by specified senior citizen under section 194P
Rule-26D(1): The declaration required to be furnished by the specified senior citizen to the specified bank under sub-clause (iii) of clause (b) of explanation to section 194P shall be in Form No. 12BBA to be furnished in paper form duly verified.
Rule-26D(2): On furnishing of the declaration in Form No. 12BBA, the specified bank shall, after giving effect to the 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 and deduct income-tax on such total income on the basis of the rates in force.
Rule-26D(3): The effect to the deduction allowable under Chapter VI-A shall be given based on the evidence furnished by the specified senior citizen during the previous year.
Rule-26D(4): The declaration referred to in sub-rule (1) and evidence for claiming deduction under Chapter VI-A referred to in sub-rule (3) shall be properly maintained by the Specified Bank and shall be made available to the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax, as and when required.
Rule-26D(5): The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify procedure for furnishing of particulars of Form No. 12BBA referred to in sub-rule (1) and evidence referred to in sub-rule (3) by the specified banks to the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax, as and when required.
Form no. 12BBA
(see rule 26D)
Declaration to be furnished by Specified Senior Citizen under sub-clause (iii) of clause (b) of Explanation to section 194P
(1) Name and address of the person:
(2) PAN or Aadhaar:
(3) Previous Year:
(4) Date of Birth:
(5) Name of the Specified Bank:
(6) Name of Employer from which pension is drawn:
(7) Pension Payment Order (PPO) Number
Verification
I, ………….. son/daughter of …………………. do hereby certify that the information given above is complete and correct and that I do not have any income other than the income of the nature of pension and/or interest which is received or receivable only in the account(s) of the specified bank stated above.
Date …………….
Place …………..
……………
(Signature of person)
Full Name: ………………….