Senior citizens with a taxable income of up to ₹5 lakh can now seek exemption from tax deducted at source (TDS) by banks and post offices on interest they earn on their deposits — a move that is expected to be welcomed by retirees living on their savings.
People who are at least 60 years old can claim exemption from TDS on interest income by submitting an amended Form 15H, two officials in the Central Board of Direct Taxes (CBDT) said on condition of anonymity. Eligible assessees can avail of the benefit by submitting details to their banks and post offices in advance.
“Earlier, banks did not deduct tax at source for total income not exceeding ₹4.5 lakh; that included ₹3 lakh under tax-exempt category and ₹1.5 lakh tax benefit under [section] 80C,” the first official said.
A notification to this effect was issued on Wednesday, but CBDT is considering issuing an explanatory statement in simple, non-technical language, given the immense implications for senior citizens who pay taxes, said the official.
Wednesday’s notification read: “Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A”.
{{/usCountry}}Wednesday’s notification read: “Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A”.
{{/usCountry}}Form 15H is submitted by an individual who is 60 years old or older and who wants to claim certain incomes without tax being deducted at source. Under sector 87A, an individual who is resident in India and whose total income does not exceed ₹5 lakh is entitled to claim a rebate.
The notification that amended Form 15H is is in line with the budget announcement of 2019-22.
“Clause 8 of the Bill seeks to amend section 87A of the Income-tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to twelve thousand five hundred rupees from existing two thousand five hundred rupees. The tax rebate shall now be admissible to taxpayers having total income up to five hundred thousand rupees, instead of existing three hundred fifty thousand rupees,” read the budget provision.
Chartered accountant Satyendra Jain said the move would help senior citizens, who now pay TDS and later seek refunds
Gopal Bohra, partner at N.A Shah Associates LLP, said: ”In the interim budget of FY 2019-20, the {Narendra} Modi government had increased the tax rebate under section 87A from ₹2,500 to ₹12,500/ if the total income of an individual does not exceed ₹5 lakh.. In order to provide relief to senior citizens, the CBDT has widened the scope of Form 15H by including the effect of the increased rebate of ₹12,500. With this amendment, the senior citizen earning income upto Rs. 5 lakh can also file Form 15H as against earlier limit of ₹3 lakh.”