Elders can possibly save on Tax Deducted at Source (TDS) on various interest incomes through submission of self-declaration forms such as Form No. 12BBA or Form No. 15H.
Generally, a 10% TDS is deducted on interest income above Rs 50,000 which a senior citizen (60 years and above) earns in a year, as per the Income-Tax Act, 1961.
With effect from April 1, 2022, senior citizens aged 75 years and above can seek exemption from filing an Income Tax Return (ITR). However, they are not exempted from paying tax.
In the Finance Act, 2021, Section 194P was introduced. With this, a senior citizen can file the tax return themselves or would deduct tax on their behalf and deposit it to the Income Tax Department.
The conditions for non-filing of tax returns are that the resident should have a pension and interest earned from deposits with banks, post-office or co-operative banks as a source of income.
Declaration in Form No. 12BBA
In order to claim the benefit under Section 194P, a senior citizen is required to furnish the declaration in Form No. 12BBA to their respective bank from which they are drawing the pension and have savings and FD accounts.
They are required to furnish details of the sum of pension drawn and interests earned on savings and FDs. Also, in case they have made any investments and would like to claim deductions under Chapter VI-A, they are required to submit the related information.
The Form No. 12BBA must be submitted in paper format to the specified bank after being duly verified.
After the form is submitted, the specified bank will deduct income tax on total income. The total income for the relevant assessment year will be computed after allowing the deductions (as per the declaration) and rebate.
All About Form No. 15H
A senior citizen can submit Form No. 15H to a bank requesting not to deduct TDS on interest income as their total income is below the taxable limit. The most important aspect to note is that in case the total income of the senior citizen is above the taxable limit and tax will have to be paid by them, they cannot submit this form. Form 15G is applicable in the same situation to those who are less than 60 years of age.
Normally, banks deduct TDS when the interest income is more than Rs 50,000 in the case of senior citizens under Section 194A of the Income Tax Act.
In this case, the bank aggregates the interest on deposits held in all its branches to calculate this limit.
A few banks also allow online submission of these forms through their official websites.
An individual is mandatorily required to furnish permanent account number (PAN) detail.
Applicant Eligibility For Form No. 15H
The individual must be a senior citizen who would have turned 60 years of age by the end of the financial year of submission. Also, the total taxable income must fall below the taxable limit. This form is valid for one financial year. You are required to submit these forms annually at the beginning of the financial year.
The condition of interest income being more than the basic exemption limit is applicable only for Form No. 15G. However, a senior citizen can submit Form No. 15H even if the basic income is more than the basic tax exemption limit. Such a senior citizen would be eligible to fill this form only when the taxable income (after deductions) is below the exemption limit.
(The author is Founder and CEO, Clear)