New Delhi: New TDS (tax deducted at source) rules, coming to effect from 1 July may lead to banks deducting TDS at higher rates from super senior citizens (80 years and above age) because the new rule doesn’t provide any exception in those cases where the person is not eligible to file income tax return (ITR), a business daily has reported.
As per a LiveMint report, , it could be possible that banks may deduct TDS at a higher rate from the interest income of super senior citizens that are generally a big chunk of their retirement corpus in bank deposits.
Senior citizens with a taxable income of up to Rs 5 lakh can now submit in banks and post offices Form 15H to claim exemption from TDS on interest income on deposits. However, in case of super senior citizen, where the income is not above Rs 5 lakh, they are not required to file an ITR. Such senior citizen, aged above 80 are exempted from income tax, and filing of ITR is not necessary.
However, since the new proposed TDS rules doesn’t provide any exception to cases where the person is not eligible to file ITR (case in point super senior citizen), it may be possible that banks may deduct higher TDS from the interest income from them.
Senior citizens, above 60 years of age, are required to submit Form 15H to banks at the beginning of a financial year to ensure that no tax is deducted at source on interest income.
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In the Union Budget 20201, FM Sitharaman announced that to reduce compliance burden on senior citizens who are of 75 years of age and above. Such senior citizens having only pension and interest income will be exempted from filing their income tax return. The paying Bank will deduct the necessary tax on their income.
