TDS Wrongly Charged On Income Earned By Senior Citizens; CBDT Clarifies The Real Limit

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    There have reportedly been instances where banks have wrongly deducted TDS (tax deducted at source) on interest earned by senior citizens. The Central Board of Direct Taxes (CBDT) has clarified that no TDS has to be deducted on such income under section 194A of the Income Tax Act unless the income exceeds Rs 50,000 during the financial year and not Rs 10,000.

    TDS Wrongly Charged On Income Earned By Senior Citizens; CBDT Clarifies The Real
     

    The CBDT said it was informed of cases where banks and some TDS chargers have been deducting TDS from senior citizens' income despite the income not exceeding Rs 50,000. "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 Rs 50,000," it said.

    The income tax regulator further said, "In exercise of the powers delegated by the CBDT(Board) under sub-rule (5) of Rule 31A of the I-T 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 Rs 50,000."

    Note that earlier TDS was charged if the interest income earned from bank and post office deposits exceeded Rs 10,000 in a single financial year. This was applicable to all taxpayers. However, the limit was increased to Rs 50,000 for senior citizens in the 2018-19 budget by the government. A new section that is 80TTB was introduced in the IT Act to provide for the same.

    Read more about: tds
    Story first published: Saturday, December 8, 2018, 12:00 [IST]
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