The Central Board of Direct Taxes (CBDT) has learnt of instances where banks wrongly deducted tax at source (TDS) on interest income earned by senior citizens. In a notification issued on December 6, it has clarified that no TDS has to be deducted under section 194-A of the Income Tax (I-T) Act in the hands of senior citizens, unless their interest income in the aggregate exceeds Rs 50,000 in a year.
Section 80-TTB was introduced with effect from April 1, 2018. Any individual, aged 60 and above, can claim a deduction of up to Rs 50,000 from his/her interest income. Thus, if the interest income is collectively less than this sum, TDS requirements do not come into play.
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