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Retirement may mean the end of active service, but not the end of income tax return filing. Many senior citizens continue to receive income through pensions, interest, rent or investments. While some assume that retirement frees them from ITR filing, the truth is that filing Income Tax Returns remains important, even after retirement. It helps avoid notices, claim eligible refunds, and stay tax compliant. The process is now more streamlined, and various provisions under the Income Tax Act offer specific benefits to senior and super senior citizens. This blog explains how retired individuals can file their ITR correctly and take advantage of the exemptions and deductions available to them.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
Taxability for Retired Persons or Pensioners
Retired individuals often have income from various sources such as pensions, savings, investments, and rental properties. Understanding these sources is the first step in filing accurate income tax returns.
- Uncommuted pensions (received monthly) are taxed under the head “Income from Salary”
- Commuted pension (received as lump sum) of government employees is completely tax exempted.
- Commuted pension of non-government employees is partially tax exempted subject to their gratuity, as: If gratuity is received – 1/3 of the total pension received is tax exempt and the remaining is taxed as salary and If gratuity is not received – 1/2 of the total pension received is tax exempt.
- Interest Income: Earnings from fixed deposits, savings accounts, and bonds are taxable under “Income from Other sources”
- Rental Income: Earnings from property rentals are taxable under “Income from House property”
- Capital Gains: Profits from the sale of assets like shares or real estate are taxable under Income from “Capital Gains”
What are Deductions and exemptions available to Retired person or Pensioner?
Standard deduction of Rs 50,000 on pension income
Deduction under Section 80C up to Rs 1,50,000 for LIC, PPF, tax-saving FDs, etc
Deduction under Section 80D for health insurance premium
Up to Rs 50,000 for self and spouse if senior citizen
Additional Rs 50,000 for parents if they are senior citizens
Deduction under Section 80DDB for specified diseases up to Rs 1,00,000
Deduction under Section 80TTB up to Rs 50,000 on interest from savings and fixed deposits in banks, co-operative banks, and post offices (for senior citizens only)
Exemption of commuted pension under Section 10(10A)
Exemption of gratuity under Section 10(10) subject to limits
Exemption of leave encashment under Section 10(10AA)
Exemption on travel concession or assistance under Section 10(5) if applicable
Higher basic exemption limit of Rs 3,00,000 for senior citizens and Rs 5,00,000 for super senior citizens
Income tax Slab rates for retired person
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Which ITR form is applicable for Retired person?
The applicable ITR form for a retired person depends on the type and source of income. If the retired individual receives only pension and interest income, ITR-1 is generally applicable, provided total income does not exceed Rs 50 lakh and there is no income from capital gains, business, or foreign assets.
However, if the person has capital gains, income from more than one house property, or income exceeding Rs 50 lakh, then ITR-2 is required.
In cases where the pensioner is running a business or profession post-retirement, such as consultancy or freelancing, ITR-3 or ITR-4 may be applicable depending on the nature and presumptive basis of income.
Benefits of ITR Filing for Retired person
Helps claim refund of excess TDS deducted on pension or interest
Proof of income for visa, loan or insurance
Enables carry forward of capital losses to future years
Useful for reporting and validating high-value financial transactions
- Helps prevent late fees and interest by filing within the due date
ITR filing Process for Retired person or Pensioners
Login to the Portal
Visit www.incometax.gov.in/iec/foportal/ and log in using your PAN and password.Select Filing Option
Click on File Return under the e-File tab. Choose the relevant assessment year and click Continue.Choose Filing Mode
Select Online Mode and proceed.Select ITR Form
Choose the applicable ITR form. Most pensioners use ITR-1 unless they have capital gains or income above Rs 50 lakh, in which case ITR-2 is required.Provide Reason for Filing
Select the applicable reason for filing, such as taxable income above the basic exemption limit or any other, etc.Fill in Income Details
Enter income details under the heads:Salary/Pension (pre-filled from AIS/26AS available)
Interest from savings/fixed deposits (verify and edit if needed)
Any other income (like rent, capital gains, etc.)
Claim Deductions
Enter deductions under Chapter VI-A (like 80C, 80D, 80TTB, etc.)Tax Summary and Verification
Review the tax computation. Ensure TDS details match with Form 26AS/AIS. Check for any refund or tax payable.Preview and Submit
Verify all details. Click Preview Return to confirm. Once satisfied, click Submit.E-Verification
Complete the process by verifying the return using Aadhaar OTP, net banking or EVC methods.Acknowledgment
Download and save the ITR-V acknowledgment for your records. No physical copy is needed if e-verification is completed.
What is the Last date of ITR filing for Retired person?
The Due date to file Income tax return for FY 2024-2025 (AY 2025-2026) is 31st July,2025 which is extended to 15 th September, 2025.
In case you miss this deadline then you can file belated ITR till 31st December, 2025 with late fees.
Also for any mistake made while filing ITR before due date, you can make corrections by filing Revised ITR any number of times till 31st December, 2025
If you miss deadline of Belated income tax return filing then you can file Updated ITR (ITR U) till 4 years from the end of relevant assessment year with late fees and additional taxes.
What are the Consequences of non-payment of Tax and non-filing of ITR?
Failing to pay taxes and file your Income Tax Return (ITR) has severe consequences. Firstly, unreported income is deemed illegal, equating to tax evasion, and can result in a penalty of 100% to 300% of the evaded tax under Section 271(C). Secondly, a penalty ranging from 10% to 90% of the undisclosed amount may be imposed under Section 271AAB, depending on the circumstances. Lastly, if you miss the filing deadline, a 1% interest per month or part thereof will be charged on the unpaid tax amount as per Section 234A.
Looking for help?
Let A R Dhorajiya & Co. make it simple for you. From choosing the right ITR form to claiming all eligible deductions, get expert support tailored for pensioners and retired individuals.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
ITR-1 is applicable if the retired person has pension and interest income, total income is within Rs 50 lakh, and there is no capital gain or foreign asset. ITR-2 is required if income includes capital gains or exceeds Rs 50 lakh.
Login to income tax portal, choose the applicable ITR form, enter pension and other income details, claim deductions, verify tax summary and e-verify the return.
Yes, if your total income exceeds the basic exemption limit of Rs. 3 lakhs, you are required to file ITR even if you are receiving government pension.
Pensioners can refer to pension slips or bank statements to calculate pension income and file ITR manually by entering these figures.
Add pension, interest, rent or other incomes, reduce eligible deductions, and apply the applicable slab rate for senior or super senior citizens.
Up to Rs 50,000 of interest income is exempt under Section 80TTB for senior citizens from bank, co-operative bank or post office deposits.
Yes, pension is treated as salary income and is taxable if it exceeds the basic exemption limit
For individuals aged 60 to 79 (Old tax regime):
Up to Rs 3 lakh – Nil
Rs 3 lakh to Rs 5 lakh – 5 percent
Rs 5 lakh to Rs 10 lakh – 20 percent
Above Rs 10 lakh – 30 percent
Yes, Employer deduct TDS on pension if the total income is taxable after giving effect to Rebate under section 87A.
Pension income is shown under the head Income from Salary in the ITR form.
Use Section 80TTB deduction up to Rs 50,000. Submit Form 15H (for senior citizens) to avoid TDS if total income is below taxable limit.
Exempt benefits like gratuity, commuted pension, and leave encashment are shown under Exempt Income schedule in ITR.
Section 80TTB allows a deduction of up to Rs 50,000 on interest income from bank, post office, and co-operative bank deposits for senior citizens.
There is no fixed limit, but interest up to Rs 50,000 is tax deductible under Section 80TTB. Amounts above this are taxable as per slab.
You can enter 80TTB under the Deductions section (Chapter VI-A) of the ITR form.
It depends on the type of payment. Gratuity, commuted pension, leave encashment, and PF withdrawal are partly or fully exempt as per applicable limits.
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