Senior Citizen Tax Exemption – Complete Guide to Tax Benefits

Key Insights 

1. Use the higher exemption limits available to you. Senior citizens get a larger basic tax exemption, and those over 80 can protect up to ₹5,00,000 of income under the old tax regime.

2. Make sure to use important deductions to save more. You can claim a ₹50,000 deduction on interest income (80TTB) and up to ₹50,000 on health insurance premiums (80D), but these are only available if you choose the old regime.

3. Think carefully about which tax regime to pick. The new regime gives a ₹7,00,000 tax-free rebate but takes away most deductions. If you want to keep the usual benefits, go with the old regime when filing your ITR.

Do you want to get the most from your retirement income? Find out about key senior citizen tax exemptions and how the income tax slab for senior citizens above 70 years is aligned with the senior citizen tax exemption new regime.

You can think of this exemption as a government-supported way to help you save more for retirement. Once you turn 60, which is the official senior citizen age in India, you qualify for a higher income tax slab for senior citizens. 

This means a larger part of your senior citizen tax exemption is tax-free compared to what younger people get.

When I turn 60, my tax-free limit increases. Under the old tax rules, my ₹4,00,000 income was taxed as a slab for senior citizens above 60 years. This meant I saved over ₹10,000 compared to the regular tax slab, so my pension lasted longer.

Eligibility Criteria for Senior Citizen Tax Exemption 

As you plan for retirement, look into extra tax benefits that might be available. See if you qualify for senior citizen tax exemptions, which can vary based on your age and location.

Here is the eligibility criteria of the Senior Citizen tax Exemption:

If you meet the age and residency requirements, you can benefit from a higher tax-free income limit. This can make a real difference during your retirement.

Deduction Limits Under Senior Citizen Tax Exemption

In the 2025-26 financial year, the New Tax Regime (Section 115BAC) does not provide higher basic exemption limits or most deductions, such as 80C, 80D, and 80TTB for senior citizens. Instead, it offers lower tax rates and a higher general exemption limit and rebate to all resident individuals, no matter their age.

Here is the deduction limit under the senior citizen tax exemption:

• Basic Exemption Limit: ₹3,00,000.
• Rebate under Section 87A: If your total income is up to ₹7,00,000, you do not have to pay any tax. For non-business income, this limit can go up to ₹12,00,000 due to a higher rebate and the standard deduction for FY 2025-26.
• Deductions Allowed: There are only a few deductions you can claim. These include a standard deduction of ₹75,000 for salaried people and pensioners in FY 2025-26, and the employer's contribution to NPS under Section 80CCD(2).

The new tax system swaps traditional deductions for lower tax rates and gives a ₹7,00,000 tax-free income rebate. This change makes tax planning simpler.

What is the income tax deduction for interest earned on bank deposits?

Section 80TTB of the Income Tax Act offers tax benefits to senior citizens on interest earned from deposits in banks, post offices, or co-operative banks. They can claim a deduction of up to ₹50,000 on interest income from both savings and fixed deposits.

According to section 194A of the Income Tax Act, banks, post offices, and co-operative banks do not deduct tax at source (TDS) on interest payments up to ₹50,000 for senior citizens. This limit applies separately to each bank.

Bonus Tip: Do you know? In the old tax regime, salaried individuals could claim House Rent Allowance (HRA) as an exemption under section 10(13A). This exemption does not apply in the new tax regime.

What are the tax benefits related to medical insurance and expenses?
 

Section 80D of the Income Tax Act allows Senior Citizens a higher deduction of up to ₹50,000 for medical insurance premiums. For Non-Senior Citizens, the limit is ₹25,000.

Section 80DDB of the Income Tax Act provides tax deductions for expenses incurred by an individual or a dependent for the treatment of specified diseases. The maximum deduction is ₹1,00,000 for Senior Citizens and ₹40,000 for Non-Senior Citizens.

How to Claim Senior Citizen Deduction in ITR?

You can make tax filing easier by using a step-by-step guide. This way, you can claim all the exemptions and deductions that are available to senior citizens in your ITR.

1. Choose the Old Tax Regime: The new tax regime does not allow most deductions under Chapter VI-A, such as 80TTB, 80D, and 80C. When filing your ITR online, make sure to select the option to opt out of the default new tax regime if you want these benefits. If you do not have business income, you can choose this option directly in the ITR form.
2. Select the Correct ITR Form:
   • ITR-1 (Sahaj): Use this if you are a resident individual with income from salary or pension, one house property, and other sources like interest, with a total income up to ₹50 lakh.
   • ITR-2: Choose this if you have income from capital gains or more than one house property, but do not have any business or professional income.
3. Report Interest Income: In the “Gross Total Income” section, enter your total interest income under "Income from Other Sources.
4. Enter Deductions: Go to the “Total Deductions” section (Chapter VI-A) in the ITR form. Here, you should:
   • Enter the eligible amount, up to ₹50,000, under Section 80TTB.
   • Enter your health insurance premiums or medical expenses under Section 80D.
   • Enter any specified critical illness treatment expenses under Section 80DDB.
   • Enter your eligible investments under Section 80C.
5. Verify and Submit: The system will automatically calculate your net taxable income and apply any rebates that apply, such as those under Section 87A. Check all your details, make sure everything is correct, and then submit your ITR.

If you carefully choose the old tax regime and make sure to report your income and deductions correctly, you can get the most tax savings as a senior citizen when filing your ITR.

Conclusion

If you are a senior citizen, tax exemptions can help you get more from your retirement income. You can use deductions like 80TTB and 80D, and choosing the right tax regime when filing your ITR can reduce your tax bill and make your finances more secure.

FAQs

Can’t I find the section to put the exemption while filing returns?  

When you file your Income Tax Return (ITR) online using the e-Filing portal, you will usually enter exemptions in the “Schedule Salary” or “Schedule Exempt Income (EI)” sections, based on the type of exemption you want to claim.

Super senior citizen filing ITR-U for the last 4 years. About 10 L income each year. Never filed a return. How much tax +interest+ penalty? 

If you are a super senior citizen aged 80 or above with an annual income of ₹10 lakh and have never filed a return, the total amount you need to pay through ITR-U will include income tax, interest at 1% per month on any unpaid tax.

What is the exemption limit under Section 80TTB for senior citizens in the new tax regime?  

Senior citizens do not get an exemption under Section 80TTB in the new tax regime, as this deduction is not allowed under the new default tax rules (Section 115BAC).

What are the income tax benefits for senior and very senior citizens?  

In India, senior and very senior citizens can get several income tax benefits under the old tax regime. These include higher basic exemption limits, bigger deductions for medical and interest income, and relief from paying advance tax.

Are senior citizens eligible for any deductions on their pension income?

Yes, senior citizens can get a standard deduction of ₹50,000 from their pension or salary income.