Senior citizens above 60 years of age face a higher income exemption threshold of ₹3 lakh under the old tax regime, compared to the ₹2.5 lakh exemption for ordinary salaried taxpayers. According to latest reports from Mint, super senior citizens aged 80 years and above enjoy an even higher exemption limit of up to ₹5 lakh annually. Notably, the new tax regime maintains the basic exemption limit at a flat ₹4 lakh annually for both senior citizens and ordinary taxpayers. Recent amendments to Section 88 have made the rebate rate 15% for income between ₹1.5 lakh and ₹5 lakh, down from the previous 20% rate, though the savings ceiling has been increased from ₹80,000 to ₹1 lakh.
Senior citizens can claim a standard deduction of ₹50,000 under the old tax regime and ₹75,000 under the new tax regime, as reported by Mint. For income up to ₹5 lakh, senior citizens are eligible for rebate under Section 87A in the old regime and are not required to pay any tax. In the new tax regime, they can claim rebate up to ₹60,000 for income up to ₹12 lakh annually. Additionally, senior citizens can claim ₹50,000 as deduction on medical insurance premiums under section 80D, compared to ₹25,000 for ordinary citizens, and ₹1 lakh flat deduction under Section 80DDB for medical expenses. The new regime also offers additional benefits including ₹50,000 deduction for National Pension Scheme and ₹2 lakh deduction on interest paid for self-occupied house.
Under the old tax regime, senior citizens can claim deduction up to ₹50,000 on interest earned from savings bank accounts, bank deposits, post office deposits, or cooperative bank deposits under Section 80TTB, which is higher than the ₹10,000 allowed for ordinary investors. According to Mint, while investing in a 5-year fixed deposit, principal up to ₹1.5 lakh and interest up to ₹50,000 can be claimed as deduction under section 80TTB. Investment of up to ₹1.5 lakh in the government's Senior Citizens Savings Scheme (SCSS) is allowed under Section 80C in the old tax regime. The Senior Citizens Savings Scheme currently offers an 8.2% interest rate for Q1 FY 2026-27, with interest paid quarterly. If total interest exceeds ₹1 lakh annually, TDS will be deducted. The new regime maintains these benefits while also allowing ₹1.5 lakh per year maximum limit for various deductions including EPF, home loan principal repayment, and additional ₹50,000 for senior citizen parents.
Once a senior citizen is above 75 years with income only from pension and/or interest, they are allowed to avoid filing income tax returns through the new Form No. 125, as reported by Mint. However, they must submit a declaration to the bank and TDS will be deducted under Section 194P. For senior citizens, there is no requirement to pay advance tax if their income does not come from a profession or business, meaning only pension and payouts are considered. The new Form No. 125 (formerly Form 12BBA) is a mandatory declaration under the Income-tax Act, 2025, for specified senior citizens to exempt them from filing Income Tax Returns. Only individuals aged 75 years or above who are residents in India can avail this facility, provided their income is only from pension and interest from the same specified bank where the declaration is filed. Any additional source of income such as rental income, capital gains, or business income automatically disqualifies the taxpayer from using this mechanism.
