Section 194P of the Income Tax Act, 1961, provides a TDS exemption for senior citizens (aged 75+) with only pension and interest income, subject to certain conditions. This provision simplifies tax compliance for eligible retirees.
1. Eligibility Criteria
✅ Who Qualifies?
- Resident individuals aged 75+in the relevant financial year.
- Income Sources: Only pension (from one former employer)and interest income (from the same bank where pension is received).
- Must file Form 12BBA: Declaring income details to the specified bank.
❌ Exclusions:
- Income from business, capital gains, rent, or other sources.
- Pension from multiple employers.
2. Key Provisions
| PARAMETER | DETAILS |
| TDS Exemption | No TDS on pension/interest if Form 12BBA is submitted . |
| Bank’s Role | Computes tax liability based on: |
- Pension amount.
- Interest income (from the same bank).
- Deductions (e.g., Section 80C, 80D) . |
| Tax Payment | Senior citizen pays advance tax (if liability exceeds ₹10,000) . |
3. Compliance Process
- Submit Form 12BBA: To the pension-paying bankat the start of the FY.
- Bank Verification:
-
- Checks eligibility.
- Calculates tax liability after deductions.
- No TDS Deduction: If tax liability is nil or covered by advance tax.
Example:
- Pension: ₹6 lakh/year + Interest: ₹3 lakh (from the same bank).
- Deductions: ₹1.5 lakh (80C/80D).
- Taxable Income: ₹7.5 lakh → Tax: Nil (under new regime).
- Result: No TDSon pension/interest.
4. Penalties for Misuse
- False Declaration: Penalty under Section 277(up to ₹10,000 + prosecution).
- Non-Payment of Advance Tax: Interest under Section 234B/C.
5. Key Takeaways
🔹 No TDS for eligible seniors (75+) with only pension + bank interest income.
🔹 Form 12BBA must be filed with the pension-disbursing bank.
🔹 Bank calculates tax: Considers deductions like 80C/80D.
🔹 Advance tax applies if liability > ₹10,000.
