In a major relief for elderly taxpayers, the Income Tax Department, under Section 194P of the Income Tax Act, 1961, continues to allow resident senior citizens aged 75 years or above to be exempt from filing Income Tax Returns (ITR) for the Assessment Year 2025-26, provided certain conditions are met.
Who Can Claim Exemption Under Section 194P?
To be eligible for exemption from ITR filing under Section 194P, the senior citizen must fulfill the following criteria:
- Age Requirement: Must be 75 years or older during the financial year 2024-25.
- Residency: Must be a resident of India for the relevant financial year.
- Source of Income: Must have only pension income and interest income from the same bank where the pension is received. No other income source is permitted.
- Specified Bank: The pension and interest must be credited through a “specified bank” notified by the Central Government (typically a scheduled bank).
- Declaration Submission: A declaration in Form 12BBA must be submitted to the specified bank.
What is Form 12BBA?
Form 12BBA is a prescribed declaration form wherein the senior citizen provides:
- PAN and PPO (Pension Payment Order) details
- Total income details (Pension + Interest)
- Deductions claimed under Sections 80C to 80U
- Rebate eligibility under Section 87A
- Confirmation that there is no other source of income
Role of the Bank
Once the declaration is submitted, the specified bank becomes responsible for:
- Computing taxable income after considering Chapter VI-A deductions and the rebate under Section 87A
- Deducting applicable TDS (Tax Deducted at Source)
- Ensuring that the senior citizen’s tax liabilities are met, eliminating the need for them to file an ITR
This move simplifies tax compliance for senior citizens, offering ease of taxation without compromising on accuracy or compliance.
Additional Benefits for Senior Citizens (AY 2025-26)
1. Increased Deductions for Medical Expenses
- Section 80D: Deduction of up to ₹50,000 for health insurance premiums and preventive health checkups
- Section 80DDB: Deduction of up to ₹1,00,000 for treatment of specified critical illnesses such as cancer, Parkinson’s disease, etc.
2. Exemption from Advance Tax
Under Section 234C, senior citizens not having income from business or profession are exempt from advance tax payments.
- Eligibility: Individuals aged 60 years or more
- Applies to: Pension, interest, rental income, capital gains, and other non-business incomes
- Tax Payment: Entire tax liability can be paid as self-assessment tax by March 31
FAQs
Is e-filing of ITR mandatory for very senior citizens?
No. Very senior citizens (80+ years) using Form ITR 1 or ITR 4 can file their returns in paper mode. However, e-filing remains optional for them.
Are senior citizens completely exempt from ITR filing?
Generally, no. However, Section 194P provides a specific exemption for resident senior citizens aged 75 and above who meet all the prescribed conditions.
What is the exemption limit for senior and very senior citizens?
- Senior Citizens (60–79 years): ₹3,00,000
- Very Senior Citizens (80+ years): ₹5,00,000
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