The board has notified the new rules and declaration forms, which the senior citizens will have to file with the specified bank, stated a local media report.
According to the CBDT notification, the banks will deduct tax on pension and interest income and deposit with the government.
Union finance minister Nirmala Sitharaman announced this new relaxation during the Union Budget 2021.
"In the 75th year of Independence of our country, the government shall reduce compliance burden on senior citizens who are 75 years of age and above," Sitharaman said.
She further added, "For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income."
As stated in the report, Union Budget 2021 proposed to insert a new section to provide relaxation from filing ITR for senior citizens, who are above 75 year, if they meet the following conditions:
(i) The senior citizen is a resident of India and of the age of 75 or more during the previous year.
(ii) The senior citizen, who has pension and no other income.
However, he or she may have interest income from the same bank in which he or she is receiving his or her pension income.
(iii) This bank is a specified bank. The central government will be notifying a few banks, which are banking company, to be the specified bank, mentioned in the Budget 2021.
(iv) He or she has to furnish a declaration to the specified bank. The declaration containing such particulars, in such form and verified in such manner, as may be prescribed
However, senior citizens, who are above 75 years of age, are not exempted from paying tax but only from filing ITR if they are eligible to certain conditions.
The exemption from filing ITR would be available only in case where the interest income is earned in the same bank where pension is deposited.
A media report quoted Union finance secretary Ajay Bhushan Pandey as, "Bank will deduct the income tax which he has to pay and deposit to the government. The condition is the person should have only pension income and interest from fixed deposit should accrue in the same bank."