Senior citizens those with age above 60 years qualify for specific tax rules for FY 2025-26 (AY 2026-27). Types of income include salary, pension, rental, capital gains, business or profession and interest/other sources.
Tax Regimes Choice
There are two regimes:
New Tax Regime with default, simpler slabs and limited deductions and other is Old Tax Regime with higher exemptions, more deductions. You can switch annualy if you are filing ITR-1 or ITR-2 but business filers with form ITR-3/4 cannot switch easily.
New Regime Slabs
- Up to Rs.4 lakh: Nil tax.
- Rs.4-8 lakh: 5%.
- Rs.8-12 lakh: 10%.
- Rs.12-16 lakh: 15%.
- Rs.16-20 lakh: 20%.
- Rs.20-24 lakh: 25%.
- Above Rs.24 lakh: 30%.
Other Benefits
- Rebate u/s 87A is up to Rs.60,000 applies if total income is less than Rs.12 lakh, making it tax-free for normal income such as:
- If rental income than 30% Standard Deduction. For example - if you earn only rental income Rs.17,00,000 then after deducting 30% = Rs.11,90,000 it means your tax payable becomes zero.
- If income is only from salary or pension and after deducting Rs.75,000 standard deduction income is less than Rs.12 Lakh, then zero tax is applicable.
- Upto Rs.12 lakh is not exempted if include special rate income, it will be taxable as STCG 20%, LTCG 12.5% after Rs.1,25,000 exemption, lottery/crypto 30% flat along with cess @4%or surcharge if it exceeds 50lakh.
Note : Even if tax payable is zero or income is exempt up to Rs.12 lakh you need to file ITR as filing becomes mandatory if total income exceeds Rs.4 lakh.
Old Regime Slabs
Seniors age between 60-80 years
- Up to Rs.3 lakh nil
- Rs.3-5 lakh 5%
- Rs.5-10 lakh 20%
- above Rs.10 lakh 30%
Super seniors age above 80
- Up to Rs.5 lakh nil
- Rs.5-10 lakh 20%
- above 30%.
Other Benefit
- More deductions like 80C, HRA available, but higher rates overall.
- If any special income except LTCG then rebate of Rs.12,500 can be taken if overall income is up to Rs. 5,00,000.
Special Benefits For Age Above 75 Year
No advance tax for seniors without business income if he or she is aged above 75 years with only pension or interest from one specified bank - exempt from ITR filing under Section 194P after bank declaration and TDS.
In Short
FY 2025-26 offers seniors relaxed slabs with rebate under section 87A up to Rs.60K and special relief for rentals/pensions. Opt for new regime if you do not have more deductions. Avoid unnecessary transactions, use Form 15G/H if eligible, check AIS/TIS/26AS annually, avoid penalties and leverage exemptions for peace of mind in retirement.
CAclubindia
