Rule 208: Specified senior citizen declaration to the bank in Form 125
Rule 208 sets the procedure for a "specified senior citizen", a resident aged 75 or more with only pension and interest income from the same specified bank, to have tax fully handled by that bank. The senior citizen may furnish the declaration in Form No. 125. The bank then gives effect to the Chapter VIII deductions and the section 156 rebate, computes total income and deducts tax at the rates in force. The bank must keep the declaration and evidence and make them available to the Chief Commissioner when required.
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Bare law
Rule 208 - Furnishing of declaration and evidence of claims by specified senior citizen under section 393(1) [Table: Sl. No. 8(iii)]
(1) The declaration under section 402(39)(c) read with section 393 (1) [Table: Sl. No. 8(iii)], may be furnished by the specified senior citizen to the specified bank in Form No. 125.
(2) The specified bank shall, after giving effect to the deduction allowable under Chapter VIII and rebate allowable under section 156, compute the total income of such specified senior citizen for the relevant tax year and deduct income-tax on such total income, on the basis of the rates in force.
(3) The effect to the deduction allowable under Chapter VIII shall be given based on the evidence furnished by the specified senior citizen during the tax year.
(4) The declaration referred to in sub-rule (1) and evidence for claiming deduction under Chapter VIII referred to in sub-rule (3) shall be properly maintained by the Specified Bank and shall be made available to the Chief Commissioner of Income-tax, as and when required.
Rule breakdown
Who is a specified senior citizen
Section 402(39) of the Act defines a specified senior citizen as an individual resident in India who (a) is 75 years or more at any time during the tax year, (b) has pension income and no other income except interest from an account in the same specified bank in which he receives the pension, and (c) has furnished a declaration to the specified bank.
What the bank does — Rule 208(1) to (3)
The declaration under section 402(39)(c), read with section 393(1) [Table: Sl. No. 8(iii)], may be furnished to the specified bank in Form No. 125.
The specified bank gives effect to the deductions allowable under Chapter VIII and the rebate under section 156, computes total income for the tax year and deducts income-tax on it at the rates in force.
Chapter VIII deductions are given on the basis of evidence furnished by the specified senior citizen during the tax year.
Records — Rule 208(4)
The specified bank must properly maintain the declaration and the evidence for Chapter VIII deductions and make them available to the Chief Commissioner of Income-tax as and when required.
Key takeaways
Form No. 125
The declaration to the specified bank is in Form No. 125.
Bank computes and deducts
The bank computes total income after Chapter VIII deductions and section 156 rebate and deducts tax at the rates in force.
Evidence during the year
Deductions are allowed on evidence furnished during the tax year.
Practical checklist
- Confirm that pension and interest are received in the same specified bank before using this route.
- Give the bank evidence of Chapter VIII investments or expenditure during the tax year.
- Keep a copy of the Form No. 125 filed.
Avoid
- Do not use this route if you have income other than pension and interest from the same specified bank.
- Do not wait until after the tax year to give evidence for deductions; Rule 208(3) refers to evidence furnished during the tax year.
FAQs
Who can use Form No. 125?
A specified senior citizen as defined in section 402(39): a resident aged 75 or more with only pension and interest income from the same specified bank.
What does the bank do after receiving Form No. 125?
It gives effect to Chapter VIII deductions and the section 156 rebate, computes total income and deducts tax at the rates in force (Rule 208(2)).
How are deductions under Chapter VIII given?
On the basis of evidence furnished by the specified senior citizen during the tax year (Rule 208(3)).
Who keeps the declaration?
The specified bank, which must make it and the evidence available to the Chief Commissioner of Income-tax when required.
Glossary
- Specified senior citizen
- As defined in section 402(39) of the Act.
- Specified bank
- The bank in which the specified senior citizen receives pension and holds the interest-bearing account.
- Form No. 125
- Declaration by a specified senior citizen to the specified bank.