CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194P — Deduction of Tax in the Case of Specified Senior Citizen
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Inserted by the Finance Act, 2021 (w.e.f. 1 April 2021); beneficial compliance provision.
Finance Act, 2026: No amendment.
Mechanism: For a resident aged 75+ with only pension and same-bank interest who files a declaration, the specified bank computes total income (after Chapter VI-A and section 87A) and deducts tax; the senior citizen is relieved from filing a return under section 139.
Litigation profile: None. A recent, beneficial provision — the candour rule applies.
A. SECTION COMMENTARY
Section 194P, inserted by the Finance Act, 2021 with effect from 1 April 2021, provides a compliance concession for a 'specified senior citizen' — a resident aged seventy-five years or more who has, in the previous year, only pension income and interest income from the same specified bank in which the pension is received. Where such a person furnishes a declaration to the specified bank, the bank must compute the total income after giving effect to the Chapter VI-A deductions and the section 87A rebate, and deduct tax thereon on the basis of the rates in force.
The quid pro quo — exemption from filing a return
The object is relief from compliance: once the specified bank deducts under section 194P, the senior citizen is relieved of the obligation to furnish a return of income under section 139 for that year (a corresponding proviso to section 139 gives effect to this). The bank, in substance, performs the assessee's computation, so the deduction is not the flat-rate withholding of the other sections but a tailored computation of the actual liability.
Why authority is absent — candour
The provision is recent, beneficial and narrow (a defined class of elderly pensioners banking with a single specified bank); it has generated no judicial authority. In candour, it is applied from its terms read with the section 139 proviso and the computational provisions it invokes (Chapter VI-A, section 87A).
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194P. (1) 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.
(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).
Explanation.—For the purposes of this section,—
(a) "specified bank" means a banking company as the Central Government may, by notification in Official Gazette, specify;
(b) "specified senior citizen" means an individual, being a resident in India—
(i) who is of the age of seventy-five years or more at any time during the previous year;
(ii) who is having income of the nature of pension and no other income except the 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
(iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.
C. AUTHORITIES
Candour rule strictly observed: section 194P is a recent, beneficial compliance provision with no judicial authority. Only the statutory scheme is offered.
No direct authority — statutory backdrop
Computation by the specified bank and the section 139 relief
Principle: For a specified senior citizen (75+, pension and interest from the same specified bank) who files the declaration, the specified bank computes total income after Chapter VI-A deductions and the section 87A rebate and deducts tax accordingly; the senior citizen is then relieved from filing a return under section 139.
Use: Explains the tailored-computation character of section 194P and the compliance relief it confers.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194P.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194P — Deduction of Tax in the Case of Specified Senior Citizen
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. Inserted by the Finance Act, 2021 (w.e.f. 1 April 2021); beneficial compliance provision.
Finance Act, 2026: No amendment.
Mechanism: For a resident aged 75+ with only pension and same-bank interest who files a declaration, the specified bank computes total income (after Chapter VI-A and section 87A) and deducts tax; the senior citizen is relieved from filing a return under section 139.
Litigation profile: None. A recent, beneficial provision — the candour rule applies.
A. SECTION COMMENTARY
Section 194P, inserted by the Finance Act, 2021 with effect from 1 April 2021, provides a compliance concession for a 'specified senior citizen' — a resident aged seventy-five years or more who has, in the previous year, only pension income and interest income from the same specified bank in which the pension is received. Where such a person furnishes a declaration to the specified bank, the bank must compute the total income after giving effect to the Chapter VI-A deductions and the section 87A rebate, and deduct tax thereon on the basis of the rates in force.
The quid pro quo — exemption from filing a return
The object is relief from compliance: once the specified bank deducts under section 194P, the senior citizen is relieved of the obligation to furnish a return of income under section 139 for that year (a corresponding proviso to section 139 gives effect to this). The bank, in substance, performs the assessee's computation, so the deduction is not the flat-rate withholding of the other sections but a tailored computation of the actual liability.
Why authority is absent — candour
The provision is recent, beneficial and narrow (a defined class of elderly pensioners banking with a single specified bank); it has generated no judicial authority. In candour, it is applied from its terms read with the section 139 proviso and the computational provisions it invokes (Chapter VI-A, section 87A).
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194P. (1) 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.
(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).
Explanation.—For the purposes of this section,—
(a) "specified bank" means a banking company as the Central Government may, by notification in Official Gazette, specify;
(b) "specified senior citizen" means an individual, being a resident in India—
(i) who is of the age of seventy-five years or more at any time during the previous year;
(ii) who is having income of the nature of pension and no other income except the 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
(iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.
C. AUTHORITIES
Candour rule strictly observed: section 194P is a recent, beneficial compliance provision with no judicial authority. Only the statutory scheme is offered.
No direct authority — statutory backdrop
Computation by the specified bank and the section 139 relief
Principle: For a specified senior citizen (75+, pension and interest from the same specified bank) who files the declaration, the specified bank computes total income after Chapter VI-A deductions and the section 87A rebate and deducts tax accordingly; the senior citizen is then relieved from filing a return under section 139.
Use: Explains the tailored-computation character of section 194P and the compliance relief it confers.
Hindustan Coca-Cola Beverages (P) Ltd. v. CIT (2007) 293 ITR 226 (SC) — cognate on default
Principle: No second recovery from the deductor where the payee has paid the tax; section 201(1A) interest runs for the period of default.
Use: Governs the consequence of a failure to deduct under section 194P.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.