Senior Citizens Of 75 Years Above May Not Have To Pay 10% TDS On FD Interest, Know How

Those senior citizen whose total taxable income is below the Rs5 lakh exemption threshold can submit Form 15H with their banks to prevent this deduction on their FD interest

Representative Image

New Delhi: In a move to ease the compliance burden on a common man during Covid times, the Budget 2021 has exempted filing ITR returns for those above 75 years from filing income tax returns (ITR).

In connection to the above rule, the Central Board of Direct Taxes (CBDT) has notified rules and declaration forms which senior citizens would have to file with the specified bank who in turn would deduct tax on pension and interest income and deposit with the government.

The new rule will also help eligible senior citizens from the hassle of claiming refunds on tax deducted at source (TDS) on FDs, as per the business publication Mint.

READ: Tamil Nadu Govt To Propose Bill For Increasing Former Legislators' Pension, Announces CM MK Stalin

As of now, a bank deducts 10 percent TDS on FD interest above Rs 50,000 earned in a year for a senior citizen aged 60 years and above. However, those senior citizen taxpayers whose total taxable income is below the Rs 5 lakh exemption threshold can submit Form 15H with their banks to prevent this deduction on their FD interest.

Also, those with taxable income above Rs5 lakh have to bear a higher tax outgo. As per the report, the flat 10 per cent TDS deduction rule on interest on FDs leads to a higher outgo than the tax which one would otherwise pay in accordance with their tax slab. Taxpayers can always claim a refund on the excess tax paid.

Now, the newly released Form 12BBA will save senior citizens from going through the hassle of claiming tax refunds. According to the Central Board of Direct Taxes (CBDT) notification, the bank will deduct income tax of the senior citizen as per the ‘rates in force’, which essentially means in accordance with the applicable tax slab, and separate TDS on FD interest won’t be deducted, said the report.

Form 12BBA is the income declaration form, notified by CBDT this week which a senior citizen have to submit to his/her respective bank to avail of the exemption from filing tax returns.

It comes as a relief to senior citizens who majorly keep the bulk of their retirement corpus in bank deposits.