Filing ITR 2025? Key tax breaks senior citizens must not overlook

Those who sold land or building must observe the recent changes to indexation benefits for calculating capital gains tax

The tax-filing season has begun. Senior citizens should take advantage of the deductions and exemptions available to them. Here’s a concise guide to help them make the most of these benefits and file their tax returns accurately.

Higher deduction limits

Medical deductions: Senior citizens enjoy higher deductions on medical insurance premiums. The deduction limit is Rs 25,000 for those below 60 years. “It is Rs 50,000 for senior citizens. And if they pay the premium for a dependent senior parent, they can claim an additional Rs 50,000,” says Deepak Kumar Jain, founder and chief executive officer (CEO), TaxManager.in.

 

Tax benefits for preventive health checkups of up to Rs 5,000 can be claimed within the Rs 50,000 limit under Section 80D.

 

“If no medical policies have been taken for senior citizens, medical expenses incurred for them (paid other than in cash) can be claimed as a deduction under Section 80D,” says Abhishek Soni, co-founder, Tax2Win.

 

Senior citizens can also claim up to Rs 1 lakh under Section 80DDB for specified diseases, compared to Rs 40,000 for those aged 59 and below. Deepak Kumar Jain informs that this applies to diseases like cancer, Parkinson’s, and chronic renal failure. “If a resident senior citizen, super senior citizen, or their dependant suffers from pre-specified diseases, they can claim a deduction for expenses incurred on treating those diseases,” says Soni.

 

Interest income: Under Section 80TTB, senior and super senior citizens can claim a deduction of up to Rs 50,000 on interest income from savings accounts, fixed deposits, or recurring deposits held in banks and post offices.

 

“People in this category have retired from service and may not have a regular source of income other than interest from deposits. Hence, providing a higher deduction would enable them to have more disposable income for meeting needs such as health care,” says Sethuraman.

 

Reverse mortgage proceeds are tax-free under Section 10(43).

 

Senior citizens opting for the new tax regime must forgo many of these deductions. “These include deductions from 80C to 80U, and the higher exemption limits. However, the rebate under Section 87A will still be available,” says Soni.

Exempt from filing ITR

For individuals aged 59 and below, the basic exemption limit is Rs 2.5 lakh. “It is Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens under the old tax regime. If their income is below this limit, they are not required to file ITR,” says Sudhakar Sethuraman, partner, Deloitte India.

 

Section 194P exempts individuals aged 75 and above from filing tax returns. However, all these exempt categories may still have to file ITR if they meet certain conditions (see box).

 

Those with only pension and interest income from the same bank are not required to file returns.

 

Senior citizens with income below the taxable limit can submit Form 15H to ask banks not to deduct TDS (tax deduction at source). Deepak Kumar Jain suggests filing ITR even if no TDS is deducted. 

 

Resident senior citizens not having income from business or profession are exempt from paying advance tax. “They can pay self-assessment tax at the end of the year instead,” says Deepak Kumar Jain.

Points to remember

Senior citizens must carefully report all sources of income. “Include pension, rental income, and capital gains,” says Shubham Jain, associate director, Nangia Andersen. He observes that seniors often miss out on deductions specific to them or claim them incorrectly.

 

Retain payment proof such as premium receipts for insurance, interest certificates, medical bills, and capital gains statements. Deductions should be claimed for payments made in the relevant financial year.

 

“Changes to the capital gain tax regime, especially regarding indexation benefits on the sale of land or a building introduced this year, should be kept in mind when reporting income,” says Shubham Jain.

 

Seniors must accurately report income to avoid discrepancies with Form 26AS and the annual information statement (AIS). Review both these documents carefully before filing ITR to prevent triggering automated notices.

 

“Even small interest income, if skipped, can create a mismatch and delay your refund. The portal now highlights mismatches. Use that to your advantage,” says Shubham Jain.

 

Seniors must choose the correct ITR form based on income type, such as pension, interest, rent, or capital gains. After filing, validate the return using an Aadhaar-enabled one-time password to avoid processing delays.

 

Seniors must select the tax regime best suited to their income sources and deductions. Finally, a thorough review before submission can help avoid common errors. Mention bank details accurately to ensure timely refunds.

 

File ITR even if income below exemption limit

 

Made deposits in savings bank account of over Rs 50 lakh

 

Made current account deposits above Rs 1 crore

 

Sales turnover exceeded Rs 60 lakh

 

Professional income was above Rs 10 lakh

 

Electricity bill over Rs 1 lakh

 

TDS/TCS above Rs 25,000 (Rs 50,000 for senior citizens)

 

Income from foreign assets or was a beneficiary

 

Foreign travel expenses above Rs 2 lakh

 

Resident taxpayers with overseas assets or signing authority

 

Note: Conditions apply to relevant financial year

 

Source: TaxManager.in