# Section 194P - TDS on Pension (with Interest on Bank Account)

## Purpose

Provides a relief mechanism: specified senior citizens (75+) need NOT file a return of income u/s 139 if the bank deducts the correct tax under 194P.

## Who Deducts

Notified specified bank (the one through which pension is received).

## Payee — 'Specified Senior Citizen'

An individual who:

Is resident in India;
Is of age 75 years or more at any time during the P.Y.;
Has pension income AND no other income except interest received / receivable from any account maintained in the same specified bank in which he gets pension;
Has furnished a declaration to the specified bank.

## Threshold

Basic exemption limit:

Tax Regime	Basic Exemption
Default (115BAC)	₹ 4,00,000
Shifted out of default (old/normal regime)	₹ 3,00,000 / ₹ 5,00,000 (super senior)

TI after considering Chapter VI-A deductions (where allowable) should exceed the basic exemption limit. Also give effect to rebate u/s 87A before deducting.

## Rate of TDS

Rates specified u/s 115BAC — if the individual pays tax under the default tax regime.
Rates in force — if the individual has opted out of the default regime.

## When to Deduct

At the time of crediting / paying pension and interest.

## Effect

Once 194P TDS is deducted properly, the specified senior citizen is exempt from filing ROI.

Worked example

### Example 1

Example: Mr. P, 78, a resident, receives pension ₹ 6,00,000 and bank interest ₹ 1,50,000 from the same specified bank, his only incomes. He has filed declaration. He has paid tax under default regime (115BAC).

Solution: Total income = ₹ 7,50,000. After standard deduction & 87A rebate (if any), the bank computes tax at 115BAC rates and deducts. Mr. P need not file ROI.

⚠️ Common exam mistakes

Assuming 194P applies to all senior citizens — only specified senior citizens (75+) with pension + interest from SAME bank
Forgetting that the senior citizen must furnish a declaration to qualify
Not giving effect to Chapter VI-A and 87A before computing TDS

Bare-Act text Section 194P · Income-tax Act, 1961 · click to expand

Notwithstanding anything contained in the provisions of Chapter XVII-B, in case of a specified senior citizen, the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rates in force. The provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1).

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Section 194P - TDS on Pension of Specified Senior Citizens (75+)

Worked example

⚠️ Common exam mistakes