CBDT notifies ‘specified bank’ for the purpose of TDS u/s 194P in case of specified senior citizen

Notification No. 98/2021, dated 02-09-2021

To provide relief to the senior citizens (whose age is 75 years or more) and to reduce the compliance burden on them, the Finance Bill, 2021, has inserted Section 194P. This provision requires the specified bank to deduct tax under this provision if the deductee is maintaining an account with it in which he is receiving his pension income.

The tax is required to be deducted if the recipient is a resident individual whose age is 75 years or more at any time during the year and the following conditions are fulfilled:

(a) Total Income of the deductee consists only income in the nature of pension and interest received or receivable from any account maintained with such specified bank; and

(b) Deductee has furnished a declaration to deductor containing prescribed particulars.

If the above conditions are satisfied, the specified bank shall compute the income of the deductee after giving effect to the deduction allowable under Chapter VI-A and rebate under Section 87A. Tax on such income is required to be deducted on the basis of rates in force. If tax is deducted from the income of such a senior citizen, he shall not be liable to furnish the return of income for the previous year in which tax has been deducted.

Now, the Central Board of Direct Taxes (CBDT) has notified specified Bank to mean a banking company which is a scheduled bank and has been appointed as agents of Reserve Bank of India under section 45 of the Reserve Bank of India Act, 1934.

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