TDS on Pension and Interest Income of Senior Citizens
Introduction
Section 194P provides that specified banks must deduct TDS on pension and interest income of senior citizens aged 75 years or more. If tax is deducted under this provision, the senior citizen is not required to file an income tax return.
Key Provisions
- Deductor:Scheduled banks appointed as agents of the RBI.
- Deductee:Resident senior citizens (aged 75 or above) receiving:
o Pension income, and
o Interest from accounts in the same bank.
Conditions for TDS Deduction
- The senior citizen’s income should consist only of pension and interest.
- Interest must be earned from accounts in the same bank.
- The senior citizen must submit a declaration (Form 12BBA) to the bank.
Rate of TDS
- Tax is deducted at the rates in force, considering:
o Deductions under Chapter VI-A.
o Rebate under section 87A.
- If no tax is due, the bank will not deduct TDS.
Compliance Requirements
- Deposit of TDS:
o Challan ITNS 281 within 7 days from the end of the deduction month.
o For March deductions, deposit by 30th April.
o Government offices depositing TDS without a challan must deposit the TDS on the same day on which the tax was deducted.
- TDS Statement Filing:Quarterly submission in Form 24Q.
- TDS Certificate:Form 16 must be issued by 15th June of the following financial year.
Consequences of Non-Compliance
- Failure to Deduct or Deposit TDS:
o Interest liability under Section 201.
o Penalty under Section 271C (up to the non-deducted amount).
o Prosecution under Section 276B.
- Failure to Furnish TDS Statement:
o Rs. 200 per day penalty under Section 234E (limited to TDS amount).
o Additional penalties under Sections 271H and 272A.
- Failure to Issue TDS Certificate:Penalty under Section 272A.