CBDT has clarified/reiterated that no tax (TDS) is required to be ‘deducted at source’ in the case of senior citizens where the amount of such income (credited or paid) during the financial year does not exceed Rs. 50,000/- in aggregate.
This clarification should be interpreted as a CBDT advisory to banks to avoid making unnecessary deductions of tax at source (TDS) u/s 194A in the case of senior citizens, where aggregate income is up to or less than Rs. 50,000 in a financial year. Banks are expected to follow these guidelines so that senior citizens do not face any difficulties in receiving TDS-free full income.
CBDT Income Tax Notification 06/2018 (DIT Systems) dt. 06/12/2018: CBDT Clarification relating to No TDS u/s 194A for Income upto 50,000 in the case of Senior Citizens
1. It has been brought to the notice of CBDT that in case of Senior Citizens, some TDS deductors/ Banks are making TDS deductions even when the amount of income does not exceed fifty thousand rupees. The same is not in accordance with the law as the Income-tax Act provides that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. (Please refer to the third proviso to sub-section 3 of section 194A).
2. Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.
3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby clarifies that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees.
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