My client is 78, has only pension and interest from the same bank, and does not want to file a return. Does s.194P get him out of filing, and what does the bank need from him?
Yes, but only if every condition is met, and the relief is a consequence of the bank's deduction and not of the client's age. Section 194P(2) provides that s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1) — so if the bank does not compute and deduct, the return obligation remains. Sub-section (1) requires a 'specified bank' to compute the total income after giving effect to Chapter VI-A deductions and the s.87A rebate and to deduct tax on that total income at the rates in force, and the Explanation confines a 'specified senior citizen' to a resident individual aged seventy-five or more at any time during the previous year, whose income consists of pension and no other income except interest received or receivable from an account maintained by him in the SAME specified bank in which he receives his pension, and who has furnished the prescribed declaration to that bank.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text as published by the Income Tax Department, and a notification of the Central Board of Direct Taxes) on 2021-09-02, reported as Income-tax Act 1961, s.194P; Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 (specified banks); Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021 (Income-tax (26th Amendment) Rules, 2021). It bears on section 194P, section 139, section 87A, section 115BAC of the Income Tax Act 1961, in TDS Defaults, Salary & Perquisites and How Tax Law Is Read matters.
Every one of the conditions is a trap and most clients who think they qualify do not. The bank must be a 'specified bank', which the Explanation leaves to be notified by the Central Government — it is not every bank. Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021, specifies for the purposes of clause (a) of the Explanation a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934. That is a class and not a list, and it bears out the caution: a co-operative bank is not a banking company for this purpose. The account from which the interest arises must be in the same bank that pays the pension; a fixed deposit at another bank, however small the interest, takes the client outside the section. Any other income at all — a small capital gain, rent, a dividend, interest from a post office or a co-operative society — takes him outside it. The age test is satisfied if seventy-five is attained at any time during the previous year, which is more generous than it looks, but the residence requirement is absolute. And the declaration is not optional: clause (iii) of the definition makes furnishing it in the prescribed form part of what makes a person a specified senior citizen. The prescribed form is Form No. 12BBA under rule 26D, both introduced by the Income-tax (26th Amendment) Rules 2021, notified as Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021; the department's own guidance says the declaration is to be furnished to the bank in paper form and not electronically. There is a further point on which the section is silent and on which no advice should be given without checking the client's regime. Sub-section (1) directs the bank to give effect to 'the deduction allowable under Chapter VI-A', but under s.115BAC, which is the default regime from AY 2024-25, almost the whole of Chapter VI-A is unavailable. Nothing in s.194P says which regime the bank is to apply or how the client is to communicate a choice, and that gap is not resolved by the statutory words.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 194P was inserted by the Finance Act 2021 with effect from 1 April 2021. Sub-section (1) provides that notwithstanding anything contained in Chapter XVII-B, in the case of a specified senior citizen the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and the rebate allowable under s.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. Sub-section (2) provides that the provisions of s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1). The Explanation defines 'specified bank' as a banking company as the Central Government may by notification in the Official Gazette specify, and 'specified senior citizen' as an individual, being a resident in India, who is of the age of seventy-five years or more at any time during the previous year; who is having income of the nature of pension and no other income except income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and who has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed. The declaration prescribed for clause (iii) is Form No. 12BBA under rule 26D, both introduced by the Income-tax (26th Amendment) Rules 2021, Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021, which also made consequential amendments to Form No. 16 and Form No. 24Q. For clause (a) of the Explanation, Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 specifies a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934. The department's guidance states that the declaration is to be furnished to the bank in paper form and not electronically.
Not applicable — statutory provision. The operative rule is that relief from filing under s.194P(2) follows only where the bank has actually deducted under s.194P(1), and that s.194P(1) operates only where all four conditions in the definition of 'specified senior citizen' are met and the bank is one specified by the Central Government.
Not applicable — statutory provision, and no decision construing s.194P was retrieved. What follows is this library's reading of the statutory words and is not authority; no court has held it. Sub-section (2) is conditioned on tax having been deducted under sub-section (1) — the words are 'in which the tax has been deducted under sub-section (1)' — so the exemption is consequential on the deduction and not on status alone. The definition of 'specified senior citizen' is cumulative on its face: clauses (i), (ii) and (iii) are joined by 'and', and clause (iii) makes the furnishing of the prescribed declaration a constituent of the status rather than a procedural formality, which is why a client who satisfies the age and income tests but has not filed Form No. 12BBA is not within the section at all. Clause (ii) uses the words 'and no other income except', which admits of no de minimis reading, and requires the interest to arise from an account 'in the same specified bank in which he is receiving his pension income'. Section 194P(1) says nothing about which regime of rates the bank is to apply, and the interaction with the default regime under s.115BAC, which withdraws most of Chapter VI-A, is not answered by the section.
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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Handle my notice → Ask a CA on WhatsAppYes, but only if every condition is met, and the relief is a consequence of the bank's deduction and not of the client's age. Section 194P(2) provides that s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1) — so if the bank does not compute and deduct, the return obligation remains. Sub-section (1) requires a 'specified bank' to compute the total income after giving effect to Chapter VI-A deductions and the s.87A rebate and to deduct tax on that total income at the rates in force, and the Explanation confines a 'specified senior citizen' to a resident individual aged seventy-five or more at any time during the previous year, whose income consists of pension and no other income except interest received or receivable from an account maintained by him in the SAME specified bank in which he receives his pension, and who has furnished the prescribed declaration to that bank. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text as published by the Income Tax Department, and a notification of the Central Board of Direct Taxes) and bears on section 194P, section 139, section 87A, section 115BAC of the Income Tax Act 1961. It is reported as Income-tax Act 1961, s.194P; Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 (specified banks); Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021 (Income-tax (26th Amendment) Rules, 2021). Every one of the conditions is a trap and most clients who think they qualify do not. The bank must be a 'specified bank', which the Explanation leaves to be notified by the Central Government — it is not every bank. Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021, specifies for the purposes of clause (a) of the Explanation a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934. That is a class and not a list, and it bears out the caution: a co-operative bank is not a banking company for this purpose. The account from which the interest arises must be in the same bank that pays the pension; a fixed deposit at another bank, however small the interest, takes the client outside the section. Any other income at all — a small capital gain, rent, a dividend, interest from a post office or a co-operative society — takes him outside it. The age test is satisfied if seventy-five is attained at any time during the previous year, which is more generous than it looks, but the residence requirement is absolute. And the declaration is not optional: clause (iii) of the definition makes furnishing it in the prescribed form part of what makes a person a specified senior citizen. The prescribed form is Form No. 12BBA under rule 26D, both introduced by the Income-tax (26th Amendment) Rules 2021, notified as Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021; the department's own guidance says the declaration is to be furnished to the bank in paper form and not electronically. There is a further point on which the section is silent and on which no advice should be given without checking the client's regime. Sub-section (1) directs the bank to give effect to 'the deduction allowable under Chapter VI-A', but under s.115BAC, which is the default regime from AY 2024-25, almost the whole of Chapter VI-A is unavailable. Nothing in s.194P says which regime the bank is to apply or how the client is to communicate a choice, and that gap is not resolved by the statutory words. If it applies to you, the first step is this: Test all four limbs of the definition before advising that the return can be skipped — resident, seventy-five or more at any time in the previous year, pension plus interest from the same specified bank and nothing else, and declaration furnished.
Section 194P was inserted by the Finance Act 2021 with effect from 1 April 2021. Sub-section (1) provides that notwithstanding anything contained in Chapter XVII-B, in the case of a specified senior citizen the specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and the rebate allowable under s.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. Sub-section (2) provides that the provisions of s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1). The Explanation defines 'specified bank' as a banking company as the Central Government may by notification in the Official Gazette specify, and 'specified senior citizen' as an individual, being a resident in India, who is of the age of seventy-five years or more at any time during the previous year; who is having income of the nature of pension and no other income except income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and who has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed. The declaration prescribed for clause (iii) is Form No. 12BBA under rule 26D, both introduced by the Income-tax (26th Amendment) Rules 2021, Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021, which also made consequential amendments to Form No. 16 and Form No. 24Q. For clause (a) of the Explanation, Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 specifies a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934. The department's guidance states that the declaration is to be furnished to the bank in paper form and not electronically. The matter was decided on 2021-09-02 by the CBDT Circulars & Instructions (Not applicable — statutory text as published by the Income Tax Department, and a notification of the Central Board of Direct Taxes). On those facts the CBDT Circulars & Instructions held as follows. Not applicable — statutory provision. The operative rule is that relief from filing under s.194P(2) follows only where the bank has actually deducted under s.194P(1), and that s.194P(1) operates only where all four conditions in the definition of 'specified senior citizen' are met and the bank is one specified by the Central Government.
Not applicable — statutory provision, and no decision construing s.194P was retrieved. What follows is this library's reading of the statutory words and is not authority; no court has held it. Sub-section (2) is conditioned on tax having been deducted under sub-section (1) — the words are 'in which the tax has been deducted under sub-section (1)' — so the exemption is consequential on the deduction and not on status alone. The definition of 'specified senior citizen' is cumulative on its face: clauses (i), (ii) and (iii) are joined by 'and', and clause (iii) makes the furnishing of the prescribed declaration a constituent of the status rather than a procedural formality, which is why a client who satisfies the age and income tests but has not filed Form No. 12BBA is not within the section at all. Clause (ii) uses the words 'and no other income except', which admits of no de minimis reading, and requires the interest to arise from an account 'in the same specified bank in which he is receiving his pension income'. Section 194P(1) says nothing about which regime of rates the bank is to apply, and the interaction with the default regime under s.115BAC, which withdraws most of Chapter VI-A, is not answered by the section. In the words reproduced by the source cited on this page: "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)."
It was decided by the CBDT Circulars & Instructions on 2021-09-02 and is reported as Income-tax Act 1961, s.194P; Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 (specified banks); Notification No. 99/2021, F. No. 370142/11/2021-TPL, GSR 612(E), dated 2 September 2021 (Income-tax (26th Amendment) Rules, 2021). Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 194P, section 139, section 87A, section 115BAC, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not applicable — statutory provision. The operative rule is that relief from filing under s.194P(2) follows only where the bank has actually deducted under s.194P(1), and that s.194P(1) operates only where all four conditions in the definition of 'specified senior citizen' are met and the bank is one specified by the Central Government. It arises in TDS Defaults, Salary & Perquisites and How Tax Law Is Read matters, on section 194P, section 139, section 87A, section 115BAC of the Income Tax Act 1961, and was decided by Not applicable — statutory text as published by the Income Tax Department, and a notification of the Central Board of Direct Taxes. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Confirm with the branch that it is a 'specified bank' for s.194P purposes: the test in Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021 is a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934, so a bank outside that class — a co-operative bank, for instance — is outside the section. Have Form No. 12BBA under rule 26D filed with the bank in paper form well before the year end, and keep the branch acknowledgement on file; without it the client is not a specified senior citizen at all. Consolidate the client's interest-bearing accounts into the pension bank before the year begins if the exemption is wanted, because interest from any other account defeats it. Do not treat the exemption as automatic. The relief in sub-section (2) is tied to the assessment year relevant to the previous year in which tax has actually been deducted under sub-section (1); if the bank fails to deduct, the s.139 obligation is unaffected and a return must be filed. Settle the regime question with the bank in writing before relying on Chapter VI-A deductions in the bank's computation, given that s.115BAC is the default from AY 2024-25 and withdraws most of Chapter VI-A.
Searched for later treatment; none was found. That is not the same as a source affirming it. Section 194P has not been amended since it was inserted. The published text of the section records insertion by Act No. 13 of 2021, the Finance Act, 2021, with effect from 1 April 2021, and prints sub-section (1), sub-section (2) — '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)' — and the Explanation defining 'specified bank' and the three cumulative conditions of a 'specified senior citizen', in the terms this entry states. No later version of the section has been found. Section 194P is not among the sections amended by the Finance Bill, 2025, and no notification superseding Notification No. 98/2021 or Notification No. 99/2021 has been found. NO DECISION CONSTRUING THE SECTION HAS BEEN FOUND, which is why the status is 'no later treatment found' rather than 'good law'. Two consequences follow. Everything this entry says about how the conditions work is a reading of the statutory words and not authority; in particular, the propositions that sub-section (2) is conditional on the deduction actually having been made, and that the declaration under clause (iii) is a constituent of the status rather than a formality, have not been tested anywhere. And the gap in the section — it directs the bank to give effect to 'the deduction allowable under Chapter VI-A' but says nothing about which regime of rates applies, or how a client communicates a choice, when s.115BAC is the default regime and withdraws most of Chapter VI-A — is unresolved and no guidance on it has been found. This states the law under the Income-tax Act, 1961, which governs every assessment year up to and including AY 2026-27. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This entry is statutory text, not a decision, and it is entered because no decision construing s.194P is available; the library holds no other entry on this section. It asserts no holding and no judge's words. THE SOURCING NEEDS CARE. The date in the 'decided_on' field, 2 September 2021, is the date of Notification No. 99/2021, which prescribed rule 26D and Form No. 12BBA; it is NOT a decision date. The published section page for s.194P does not display the footnote showing which Act inserted the section or from when, so the commencement stated in this entry — inserted by the Finance Act 2021 with effect from 1 April 2021 — comes from the amending Act itself and not from that page; it has not been read in the Gazette. The number, file number, GSR number, date and subject of Notification No. 99/2021 were read on the Department's own notification page, but THE TEXT OF RULE 26D ITSELF HAS NOT BEEN READ, nor has Form No. 12BBA, so nothing is stated here about what particulars the form calls for or how it is to be verified. Anyone advising a client to file it must read the form. Notification No. 98/2021, S.O. 3595(E), dated 2 September 2021, which specifies banks for clause (a) of the Explanation, specifies a class and not a list — a banking company which is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act 1934 — and its text was read in two independent reproductions rather than on the Department's own page. No individual bank is named in this entry, and a practitioner should satisfy himself that the client's bank answers that description before relying on the section. Finally, the statement that the declaration is to be furnished to the bank in paper form and not electronically comes from the Department's guidance on this section, which is available only in summarised form and is therefore described rather than quoted; it is administrative guidance and not part of the section or the rule. Two limits on the entry's reach. It does not state the rate at which the bank is to deduct, because the section says only 'the rates in force' and the answer depends on the regime that applies to the client. And it does not deal with what happens where the bank deducts but the client turns out not to have been a specified senior citizen — the relief in sub-section (2) is expressed to follow a deduction under sub-section (1), and a deduction made where the conditions were not met is not a deduction under that sub-section. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not applicable — statutory provision. The operative rule is that relief from filing under s.194P(2) follows only where the bank has actually deducted under s.194P(1), and that s.194P(1) operates only where all four conditions in the definition of 'specified senior citizen' are met and the bank is one specified by the Central Government.
TaxSphere, “Statutory position — s.194P: the specified senior citizen, the declaration, and relief from filing”, https://taxnotice.vittsphere.com/caselaw/case/section-194p-specified-senior-citizen-conditions-and-form-12bba/ (validity last checked 2026-09-07)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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