Exemption from filing income tax return is available to only such senior citizens who have income only from interest on pension and fixed deposits.
Income Tax Return: The government gives tax concession to the elderly. Under this, senior citizens are exempted from paying TDS on FD interest. If you also want to avoid paying 10% TDS, then you have to do some important things first.
Senior citizens should submit the self-declaration form to their bank at the beginning of the financial year. These include Form 15G and Form 15H.
In case the taxable income is less than the tax-exempt limit, the taxpayer can request the bank not to deduct tax on the interest. From this year onwards, senior citizens aged 75 years and above who do not wish to file income tax return can submit Form 12BBA to their bank.
Who will get the discount?
Exemption from filing income tax return is available to only such senior citizens who have income only from interest on pension and fixed deposits. The second condition is that the pension and the fixed deposit should be in the same bank. There are many things to be filled in Form 12BBA. These include details of deduction under section 80C to section 80U, tax rebate under section 87A and total income from interest from fixed deposits and FDs.
According to the Central Board of Direct Taxes, after the form is submitted, the bank calculates the total income of the taxpayer. For this, he considers tax deduction and rebate under section 87A and deducts tax from the final income as per the slab rate.
CBDT has taken care that there should not be any problem in filling this form. For this, it has asked banks to help senior citizens fill up the form.
In a way, the bank will file Income Tax Return (ITR) on behalf of senior citizen taxpayers. This move of CBDT is very good. Actually, senior citizens find it difficult to file ITR, because the rules of income tax keep changing.
Why is it important to submit 12BBA
Another advantage of submitting Form 12BBA is that senior citizens do not have to worry about refund of tax deducted on FD interest. As per income tax rules, if a senior citizen of 60 years and above has an interest income of more than Rs 50,000 in a financial year, then the bank will deduct 10% TDS on it.
Taxpayers who fall in the 5% and 10% income tax slabs, their money will go out in TDS. For example, if a person has an interest income of Rs 7 lakh, then according to 10 per cent TDS, he will lose Rs 70,000. If the taxpayer submits Form 12BBA, then he will have to pay tax of Rs 52,500. Taxpayers who do not fill Form 12BBA will get a refund of Rs 17,500.
20% tax is levied for not submitting PAN card
If the depositor does not submit Permanent Account Number (PAN), then 20% tax will be levied on FD. If the amount of interest received by you is within the exemption limit and the bank still deducted TDS, then you can claim it while filing income tax return.
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