The pensioners face lots of difficulties while filing their income tax returns. One of the main reasons for this is the fact that banks refuse to issue I-T deduction certificates on the plea that since they are only making the payment on behalf of their ex-employer, they are not bound to issue the certificate.Also, when the pensioners go to file their returns with the Income Tax Department, their returns are not accepted by the Department on the ground that their returns are incomplete as TDS certificates are not attached to their returns. Thus, the elderly persons are caught in a vicious circle as to how to abide the law and sometimes are even unable to file their returns.
After lot of representations, the I-T department has woken up to solve this intricate problem. The department has recently issued specific instructions that it is the obligation of the banks to issue Certificate of Tax Deduction at Source to the pensioners, after they have deducted the tax even though they are not the employer ofthese persons.
CIRCULAR NO 761. DATED 13.1.1998
1. The attention of the department has been drawn to certain difficulties being faced by pensioners drawing their pensions through banks where the tax deduction at source certificate in the prescribed Form No. 16 is sometime denied to them on the ground that no employee-employer relationship exists between the banks and the pensioners. At times, objections have also been raised by the banks and the pensioner. At times, objections have also been raised by the banks on the premise that Form 16 relates to deductions from salaries and not from pensions. In other cases, the certificates have been denied on the ground that the bank was not aware of any other income which the pensioner may have had.
2. The matter has been considered by the Board. It is hereby clarified that:9a) as per section 17 (ii) of the Income Tax Act, 1961, the term salary includes pension;
(b) once tax has been deducted under section 192 of the Income Tax Act, 1961, the taxdeductor is bound by section 203 to issue the certificate of tax deducted in form 16. No employee-employer relationship is necessary for this purpose;
(c) the certificate in Form 16 cannot be denied on the ground that the tax deductor is unaware of the payees other income.
3.These clarifications may be brought to the notice of all concerned, especially the banks in your region.
Senior Citizen Rebate
The pensioners who are above the age of 65 should also bring this fact to the knowledge of the respective banks that they are eligible for 100 per cent senior citizen for rebate under section 88B of the Income Tax Act 1961 subject to a limit of Rs 10,000. Practically for all the pensioners who are having their income below Rs one lakh, no tax has to be deducted out of their pensions and also the pensioners who are getting their income also Rs one lakh, the tax has to be deducted after giving the rebate.
This rebate is available to all the Senior Citizens irrespective of the income limit.
It ishoped that after the above clarifications, the pensioners will get much needed relief in the tax sect and also filing their returns of income also be more simple.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
