Library / Income-tax Act, 2025: The Professional's Master Guide
19. Taxation of Senior Citizens
Senior citizens (60 years or more) and super senior citizens (80 years or more) have several special provisions. This chapter brings them together so that advisers can review a senior's position quickly.
Provision | Benefit |
|---|---|
Basic exemption (old regime) | Rs. 3 lakh (60 to 79); Rs. 5 lakh (80 and above) |
New regime | Same slabs as others; section 156 rebate makes income up to Rs. 12 lakh tax-free |
Standard deduction on pension | Rs. 75,000 (new) or Rs. 50,000 (old) |
Interest deduction (old regime, section 153) | Up to Rs. 50,000 on interest from banks, co-operative banks and post office |
Health insurance (old regime, section 126) | Up to Rs. 50,000; medical expenditure allowed if no insurance |
Specified diseases (section 128) | Up to Rs. 1 lakh |
TDS threshold on bank interest | Rs. 1,00,000 per bank per year |
Form 121 declaration | No TDS if tax on estimated income is nil, even if income exceeds the exemption limit |
Advance tax | Not required for residents without business or professional income |
Seniors aged 75 plus with only pension and interest from the same bank | Bank computes and deducts tax; no need to file a return |
Paper return | Super senior citizens may file paper returns in specified cases |
Illustration 91: Senior with pension and interest Mrs. Kulkarni, 70, has pension of Rs. 4,80,000 and bank interest of Rs. 5,00,000. New regime: pension less Rs. 75,000 = Rs. 4,05,000; total income Rs. 9,05,000, rebate covers the tax, nil tax. Old regime: pension less Rs. 50,000 = Rs. 4,30,000; interest less Rs. 50,000 = Rs. 4,50,000; total Rs. 8,80,000; tax = Rs. 10,000 + 20% of Rs. 3,80,000 = Rs. 86,000 plus cess. She should stay in the new regime and give Form 121 to her bank to avoid TDS of Rs. 50,000 on the interest. |
19.1 Common issues for seniors
- TDS deducted by banks despite nil tax, because Form 121 was not given in April; the refund comes only after filing a return.
- Interest on cumulative deposits reported on accrual in AIS while the senior reports on maturity; choose one method consistently and reconcile.
- Capital gains on sale of the family house, with the indexation option and section 82 or 85 planning (see Case Study 4).
- Gifts from children are exempt (relatives), and the income from gifted money is not clubbed with the child's income.
- Reverse mortgage receipts are not income.
Chapter summary • Old regime gives higher exemption and deductions; the new regime rebate often makes seniors tax-free. • Form 121 prevents unnecessary TDS; no advance tax without business income. • Seniors aged 75 plus with only pension and interest from one bank need not file. |
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