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Quick Summary
Senior citizens with age 60 or above can pay ZERO income tax on incomes up to ₹17.13 lakh for Financial Year 2025–26 (Assessment Year 2026–27).
If you file ITR for AY 2026-27 under New Tax Regime, tax slab system will be:
- Up to ₹4,00,000: Nil
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 – ₹12,00,000: 10%
- ₹12,00,001 – ₹16,00,000: 15%
- ₹16,00,001 – ₹20,00,000: 20%
- ₹20,00,001 – ₹24,00,000: 25%
- Above ₹24,00,000: 30%
The basic exemption limit combined with the Section 87A rebate makes net taxable income up to ₹12,00,000 completely tax-free.
Under Section 87A for FY 2025–26, resident individuals receive a maximum tax rebate of ₹60,000.
Deductions Allowed
- Standard Deduction: ₹75,000 for salaried or pensioner.
- Rental Income: 30% Standard Deduction under Section 24(a)
- Family Pension Deduction: 1/3 of family pension or ₹25,000 whichever is lower.
- Commuted Pension (lump sum): Fully exempt for Government Employee.
- Private Commuted Pension: 1/3 or 1/2.
- Gratuity, VRS, Lead Encashment: ₹20 lakh, ₹5 lakh, ₹25 lakh.
- Gratuity or Leave: Fully Exempt for Government Employee
- Conveyance: Actual expenditure
- Capital Gain: Exemption under section 54, 54F, 54EC.
- Long Term Property Sell: Indexation Benefits
- LTCG u/s 112A Shares or Mutual Funds: Up to ₹1.25 lakh.
- PPF or SSY: Fully exempted.
- Life Insurance Maturity: Fully Exempted
- Gifts Received Gift on Marriage Occasion: Fully exempt from relatives.
- Sec 80CCD(2) (Employer NPS Invest): 14% of Basic Salary + DA
- Sec 80CCH: Agnipath Scheme: 100% Contribution
- Sec 80JJAA: Up to 30% Additional Costs
- Transport Allowance Handicapped: Up to Rs. 3,200 Per Month
- Will, Inheritance: 100% Exempt
Know About - Pensioner ITR for AY 2026-27: Guide to Reporting Pension Income and Claiming Your Tax Refund
What Happens If You Exceeds ₹12 Lakh?
If your normal taxable income is more than ₹12,00,000 (say, ₹12,10,000), you lose the rebate but marginal relief may reduce the extra tax.
Here,
- Normal income includes salary, pension, and FD interest.
- Special income includes capital gains and lottery winnings is taxed separately and does not qualify for the rebate.
Example
When your income is only from Pension or Fixed Deposit or Rent
| Particulars | Pension Income | FD Income | Rent Income |
| Income | 12,75,000 | 12,00,000 | 17,13,000 |
| Less: Standard Deduction | -75,000 | ||
| Less: 30% Standard Deduction | -513900 | ||
| Net Total Income | 12,00,000 | 12,00,000 | 11,99,100 |
| Tax on Net Total Income | 60,000 | 60,000 | 60,000 |
| Rebate u/s 87A | -60,000 | -60,000 | -60,000 |
| Final Tax | Nil | Nil | Nil |
Up to ₹12,00,000 Total Income Includes:
| Particulars | Up to 12 lakh | Rebate u/s 87A |
| Pension or Salary | Yes | Yes |
| FD Interest | Yes | Yes |
| Saving Interest | Yes | Yes |
| Rental Income | Yes | Yes |
| Business or profession Income or Commission Income | Yes | Yes |
| Future and Option/ Intra Day/ Trading Income | Yes | Yes |
| STCG/ LTCG/ Winning Income/ Special Income | No | No |
| STCG on Property | Yes | Yes |
| Dividend and Other Interest Income | Yes | Yes |
Which ITR Form To Choose For AY 2026-27?
| Income From | ITR Form | Due Date |
| Pension + FD + Saving + Upto 2 House Property | ITR-1 | 31st July 2026 |
| Pension + FD + Saving + LTCG up to 1.25L | ITR-1 | 31st July 2026 |
| Pension + 44AD + LTCG up to 1.25 Lakh | ITR-4 | 31st Aug 2026 |
| Business or Profession 44AD, 44ADA, 44AE | ITR-4 | 31st Aug 2026 |
| F&O, Intra-day Trading, FD, Interest | ITR-3 | 31st Aug 2026 |
| STCG, LTCG Upto Rs. 1,25,000 + FD + Saving | ITR-2 | 31st July 2026 |
| Commission or Brokerage Income | ITR-3 | 31st Aug 2026 |
| STCG + LTCG + F&O + Intraday | ITR-3 | 31st Aug 2026 |
| F&O Trading + 44AD | ITR-4 | 31st Aug 2026 |
Before filing your ITR, you must check documents like Form 16, Form 26AS, AIS/TIS, bank interest certificates and home loan interest certificates to avoid mistakes.
Explore More: Individual Income Tax Return Filing Last Date For FY 2025-26
FAQ :
Senior citizens can pay zero income tax on incomes up to ₹17.13 lakh for AY 2026-27 by utilising the New Tax Regime, which includes the basic exemption limit and the Section 87A rebate.
For FY 2025-26, the Section 87A rebate provides resident individuals with a maximum tax rebate of ₹60,000, making net taxable incomes up to ₹12,00,000 completely tax-free.
Available deductions include a standard deduction of ₹75,000 for salaried or pensioners, 30% for rental income, deductions for family pension, commuted pension, gratuity, leave encashment, and exemptions for gifts on marriage and employer's NPS investment.
The choice of ITR form depends on the income sources. For example, ITR-1 is suitable for pension and FD income up to ₹12 lakh, while ITR-4 is for those with income from business or profession under sections 44AD, 44ADA, or 44AE.
If the normal taxable income exceeds ₹12,00,000, the Section 87A rebate is lost, but marginal relief might reduce the additional tax liability. Special incomes like capital gains are taxed separately.
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