Any retired person receiving income after retirement from Central or State Government or private sector employment is considered a pensioner.
Under which head pension income is taxable?
Pension income is taxed under "Salary Income".
Also note family pension is not salary it is different and is taxed under "Income from Other Sources."
Types of Pension and Taxation
| Monthly Pension | Fully taxable for government or non-government employees. |
| Lump Sum Pension | Fully exempt for government employees but for non-government employees partially exempt (50% or 1/3rd). |
Age Categories of Pensioner
Exemptions and limits may differ by age group.
| Age | Category | Under Old Regime | Under New Regime |
| Below 60 | Not senior citizens | Rs. 2,50,000 | Rs. 3,00,000 |
| 60 to 80 | Senior citizens | Rs. 3,00,000 | Rs. 3,00,000 |
| Above 80 | Super senior citizens | Rs. 5,00,000 | Rs. 3,00,000 |
When ITR Filing becomes Mandatory for Pensioners?
Filing becomes mandatory if total income before deductions like Chapter VI-A (80C to 80U) and capital gain exemption 54, 54EC, 54F etc. exceeds the basic exemption limit.
Even if your income is below exemption limit, ITR filling is still compulsory.
Additional Mandatory Situations
- Deposits in current account exceed Rs.1 crore.
- Deposits/credits exceed Rs.50 lakh in savings account,
- Spending is over Rs.2 lakh on foreign travel,
- Electricity bill paid exceeds Rs.1 lakh yearly,
- Total TDS/TCS deducted is Rs.25,000 or more and for Senior Citizen Rs.50,000 or more.
- Business turnover exceeds Rs.60 lakh or profession receipts over Rs.10 lakh,
- Foreign assets, income or signing authority abroad.
When Filing is Not Compulsory for Pensioners?
If pension income and other eligible incomes stay within the exemption threshold, filing ITR is not compulsory.
| Income Head | Age 60 to 80 | Age above 80 | ||
| Old Tax Regime | New Tax Regime | Old Tax Regime | New Tax Regime | |
| Pension Income | 3,50,000 | 3,75,000 | 5,50,000 | 3,75,000 |
| Pension + LTCG 112A | 4,75,000 | 5,00,000 | 6,75,000 | 5,00,000 |
| Pension + FD + Saving Interest | 3,50,000 | 3,75,000 | 5,50,000 | 3,75,000 |
| Pension + STCG 111A | 3,50,000 | 3,75,000 | 5,50,000 | 3,75,000 |
| Pension + F&O + Intraday Trading | 3,50,000 | 3,75,000 | 5,50,000 | 3,75,000 |
| Family Pension + FD + Saving Interest | 3,00,000 | 3,00,000 | 5,00,000 | 3,00,000 |
Here,
- Standard Deduction = 50,000
- Long Term Capital Gain 112A = 1,25,000
Note: No standard deduction is available for family pension income.
Applicable ITR Forms for Pensioners
| Form | Income |
| ITR-1 | Pension + interest + one house property |
| ITR-2 | Pension + short term or long term capital gains |
| ITR-3 | Pension + F&O Trading |
| ITR-4 | Pension + business/professional income + F&O Trading + Intra Day trading + FD or Saving Interest |
Special Exemption under Section 194P for age above 75 years
If a resident aged is above 75 years and has only pension + interest from the same bank (specified bank), files Form 12BBA, and bank deducts TDS correctly → no need to file ITR.
Restrictions on 194P Exemption
- TDS deducted in any other sections.
- Not available if FD or saving interest is in another bank.
- Not valid if income includes capital gains, rental, dividend, or other sources.
- TDS must be done by the same bank after giving deductions/rebate.
Benefits for Pensioners under Income Tax Act
- No advance tax liability (except business income) and age is above 60 years.
- Deductions: Family pension (1/3rd or Rs.15,000/₹25,000), 80C (Rs.1.5 lakh), 80D (health insurance), 80TTB (Rs.50,000 interest for seniors), standard deduction (Rs.50,000 old regime, Rs.75,000 new).
- Exemptions for gratuity, VRS, leave encashment, commuted pension.
Conclusion
Pensioners must check age, income level, and the sources income to know whether ITR is mandatory or not. Those aged above 75 years with only pension and interest in the same bank can avoid ITR by using Form 12BBA, but others may still need to file depending on income and compliance conditions.
CAclubindia
