ITR Filing 2025: Key Deductions and Exemptions for Senior Citizens Explained  

With the tax filing season approaching for the Assessment Year (AY) 2025-26 (FY 2024-25), senior citizens must take note of special tax benefits they’re eligible for. The Income Tax Department has released seven updated ITR filing 2025 forms for different taxpayer categories, reflecting the latest tax law changes. 

Let’s explore the key tax benefits for pensioners and retired individuals, especially those receiving retirement payouts like gratuity, commuted pension, and provident fund. 

Who Qualifies as a Senior Citizen? 

According to the Income Tax Department: 

• Senior Citizen: A resident individual aged 60 years or more but below 80 during the financial year. 

• Super Senior Citizen: A super senior citizen is someone who is a resident of India and is 80 years old or above during the financial year. 

ITR Filing 2025: Tax Exemption Limits for Senior Citizens 

You can file taxes under either the Old Regime or the New Regime: 

• Old Regime: 

• Up to ₹3 lakh: No tax (for those aged 60–80) 
  Up to ₹5 lakh: No tax (for those aged 80+) 

• New Regime: 

• Uniform exemption of ₹3 lakh for everyone, regardless of age. 

Is Pension Taxable? 

• Employer Pension: Taxed as "Income from Salary". 

• Annuity or Personal Pension Plans: Taxed under "Income from Other Sources". 

Can You Claim the Standard Deduction? 

• Old Regime: Pensioners aged 60+ can claim a standard deduction of ₹50,000. 

• New Regime: 

• AY 2024-25: ₹50,000 

• AY 2025-26: Increased to ₹75,000 

Do You Have to Pay Advance Tax? 

• If your total tax due exceeds ₹10,000 in a year, advance tax applies. 

• Exception: If you’re a resident senior citizen (60+) without income from business/profession, you don’t need to pay advance tax. 

Tax Slabs Under the Old Regime (AY 2024-25 & AY 2025-26) 

For those aged 60–80 years: 

• Income up to ₹3 lakh: No tax 

• ₹3–5 lakh: 5% 

• ₹5–10 lakh: 20% 

• Above ₹10 lakh: 30% 

Is Gratuity Taxable? 

Gratuity may be fully or partially tax-free depending on the situation: 

• Government Employees: Fully exempt. 

• Under Payment of Gratuity Act, 1972: Exempt up to the limits specified. 

• Other cases: Partial exemption based on certain conditions. 

Read More, ITR Filing FY25: Is It Possible to Earn Crores and Still Pay Zero Income Tax in India? 

Is Commuted Pension (Lump Sum) Tax-Free? 

• Government Pension: Fully tax-free. 

• Other Employers: 

• If gratuity is received: 1/3 of the amount is tax-free. 

• If gratuity isn’t received: 1/2 of the amount is tax-free. 

• LIC or Approved Fund Commutations: Fully tax-free. 

Final Thoughts 

Retirement should be a time of ease, not tax worries. By staying informed about exemptions on pensions and retirement benefits, senior citizens can maintain financial stability and peace of mind. Choosing the right tax regime and using eligible deductions can help lower the overall tax burden. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.      

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.