who gets the discount
Only senior citizens earning income from pension and interest from fixed deposits (FDs) are eligible for this exemption. But there is a condition that pension and interest income should be deposited in the same bank.
this is the rule
Form 12BBA is a complete form that seeks details on tax deductions to be claimed under section 80C to section 80U. Along with this, you will also have to give details of tax exemption claim under section 87A, which brings your taxable income to less than Rs 5 lakh. The details of total interest from fixed deposits and total income from pension will also have to be given in the form.
CBDT Process
According to the Central Board of Direct Taxes (CBDT), after submission of the form, the bank will calculate the total income of the taxpayer after considering tax deduction and exemption under section 87A and deduct tax on the income received based on slab rates. Further, to ensure that senior citizens do not face difficulty in filling up the form, CBDT has directed banks to assist eligible senior citizens in filling the form.
There will be savings in TDS
Additionally, by submitting Form 12BBA, senior citizen taxpayers can also avoid the hassle of getting refund on Tax Deduction at Source (TDS) on FD interest. As per the IT laws, 10 per cent TDS is deducted on interest income above Rs 50,000 earned by a senior citizen of age 60 years and above. For example, a person with interest income of Rs 7 lakh would pay tax of Rs 70,000 on deducting 10 per cent TDS, whereas if the same taxpayer submits Form 12BBA, he will have to pay tax of Rs 52,500. In this case, the taxpayer will get a refund of Rs.17,500.
Senior Citizen Savings Scheme
Let us tell you about another tax saving option for senior citizens. This is the Senior Citizens Savings Scheme. It is a great tax saving investment option for senior citizens, which is designed to financially secure one’s life after retirement. It is an attractive investment option for those who want to invest in a long-term savings plan and get other added benefits along with safety in investment.
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