TDS U/S 194P: TDS ON EXEMPTION FOR ITR FILING FOR SENIOR CITIZEN
TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.
TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.
The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.
The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.
Note: –
Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.
Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.
Section 194P of Income Tax Act, 1961 was introduced to provide conditional relief to senior citizen above the age of 75 years from filing of Income Tax Returns.
TDS is required to be deducted: –
Or
Few examples of date of deduction are: –
|
S.no |
Date of Payment |
Date of crediting the party in books of accounts |
Date of TDS deduction |
|
1. |
30/04/2024 |
30/04/2024 |
30/04/2024 |
|
2. |
30/04/2024 |
01/05/2024 |
30/04/2024 |
|
3. |
01/05/2024 |
30/04/2024 |
30/04/2024 |
|
4. |
01/05/2026 |
30/04/2024 |
30/04/2024 |
Section 194P mandates that the senior citizens are not required to filed Income Tax return if the bank has deducted TDS on their income.
NOTE: –
This section i.e. TDS u/s 194P is not applicable when the senior citizen is a non-resident.
Example: –
Mr. Singh a resident of India aged 77 years has pension income of Rs 52000 per month and the same is credited to SBI bank. In addition, he gets interest @ 8% on deposits of Rs. 20 lakhs with the same bank. Out of the deposit of Rs. 20 Lakhs, Rs. 2 lakhs represent Five-year term deposit made by him. Interest on Saving bank credited to his saving account was Rs. 9500? Compute the TDS deductible by SBI bank if Mr. sharma has filed a declaration with them?
Computation of tax liability under old scheme
|
. |
Particulars |
Rs. |
Rs. |
|
I |
Income from Salaries Pension (52000*12) Less: Standard deduction . |
. 6,24000 (50,000) |
. . 5,74,000 |
|
II |
Income from other sources Interest from Deposits Interest from Savings bank |
. 1,60,000 9,500 |
. . 1,69,500 |
|
Gross Total Income |
. |
7,43,500 |
|
|
Less: Deduction on Chapter VI-A U/S 80C Five year term deposit (2 lakhs, restricted to 1.5 lakhs) . U/S 80TTB Interest on Fixed deposits & Saving bank(restricted to 50,000) |
. . 1,50,000 . . 50,000 |
. . . . . (2,00,000) |
|
|
Total Taxable Income |
. |
5,43,500 |
|
|
Tax payable as per slab |
. |
18,700 |
|
|
Add: Health & education cess @ 4% |
. |
748 |
|
|
Total Tax liability (rounded off) |
. |
19,450 |
|
Computation of tax liability under new scheme (115 BAC)
|
. |
Particulars |
Rs. |
Rs. |
|
I |
Income from Salaries Pension (52000*12) Less: Standard deduction . |
. 6,24000 (50,000) |
. . 5,74,000 |
|
II |
Income from other sources Interest from Deposits Interest from Savings bank |
. 1,60,000 9,500 |
. . 1,69,500 |
|
Gross Taxable Income |
. |
7,43,500 |
|
|
Less: Deduction under Chapter VI-A (No deduction under new scheme) |
. |
Nil |
|
|
Total Income |
. |
7,43,500 |
|
|
Tax Payable as per slab rate |
. |
29,350 |
|
|
Health & Education cess @ 4% |
. |
1,174 |
|
|
Total Tax Payable |
. |
30,520 |
|
Since Mr Singh liability is less under new scheme i.e. 115BAC so bank must deduct TDS under new scheme @ 2544 (approx.) per month (30,520/12).
Mr. Singh is not required to file his Income tax return as all conditions of 194P are satisfied.
The TDS rate is determined as per the slab rate of the resident individual.
The due date for deposit of TDS is as below: –
|
Month |
Due Date |
|
April |
On or before 7th May. |
|
May |
On or before 7th June. |
|
June |
On or before 7th July. |
|
July |
On or before 7th August. |
|
August |
On or before 7th September. |
|
September |
On or before 7th October. |
|
October |
On or before 7th November. |
|
November |
On or before 7th December. |
|
December |
On or before 7th January. |
|
January |
On or before 7th February. |
|
February |
On or before 7th March. |
|
March |
On or before 30th April. |
TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –
|
Quarter |
Period |
Due date (TDS filing) |
|
1St quarter |
April-June |
31st July. |
|
2nd quarter |
July-September |
31st October. |
|
3rd quarter |
October- December |
31st January. |
|
4th quarter |
January- March |
31st May. |
TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.
Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.
|
Particulars |
Penalty |
|
TDS not deducted on time. |
1% per month or part of month. |
|
TDS deducted but not deposited before due date |
1.5% per month or part of month. |
|
TDS return not file on or before due date |
200 per day maximum till TDS amount. |
FREQUENTLY ASKED QUESTIONS?
Q. Which tax regime will be applied wile deducting TDS u/s 194P?
A. The bank calculates the taxable income after getting the declaration from the senior citizen and applies the beneficial tax regime to the taxpayer to arrive at the TDS to be made u/s 194P.
Q. What is the age limit for 194P?
A. The age limit for relaxation of filing of ITR under Section 194P is 75 years or above.
Q. Is there any threshold under Section 194P?
A, Yes, if the income is below the basic exemption limit then TDS will not be deducted.
DECLARATION BY A SENIOR CITIZEN
The Specified bank, as mentioned above, shall deduct TDS based on a declaration submitted by the senior citizen to the bank.
The declaration should contain the below- mentioned details:
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