Short answer: No. A resident senior citizen aged 75 or more, whose only income is pension plus interest from the same specified bank, does not have to file an income tax return — provided the bank deducts the correct tax. This is not an exemption from tax. If tax is due, the bank deducts it.
What is Section 194P?
Section 194P of the Income-tax Act 1961 was inserted by the Finance Act 2021. It came into force on 1 April 2021. It allows certain senior citizens to skip filing an income tax return.
The logic is simple. If your only income is pension and interest from one bank, and that bank deducts your tax for you, the tax department already has your full income picture. A return would add nothing new.
Two points to keep clear from the start:
- The relief is from filing a return. It is not relief from paying tax.
- It is optional. You can still file if you prefer.
Section 194P in numbers
| Number | What it means | Source |
|---|---|---|
| 75 years | Minimum age — you must be 75 or more at some point during the previous year | Finance Act 2021 |
| Rs 12,00,000 | Income up to which tax is nil under the new regime, after the Section 87A rebate | Finance Act 2025 |
| Rs 50,000 | Maximum Section 80TTB deduction on interest income for senior citizens (old regime only) | Income-tax Act 1961 |
| Rs 1,00,000 | TDS threshold on bank interest for senior citizens under Section 194A, raised from Rs 50,000 | Finance Act 2025 |
Who qualifies?
Four conditions. All four must be met.
- You must be a resident for the previous year.
- You must be aged 75 or more during that previous year.
- Your only income must be pension plus interest from the same specified bank.
- The bank must deduct the correct tax on that income.
Miss any one of these and you must file a return.
Note the age wording. It is not “75 by the end of the year”. The test is whether you are 75 or more at any point during the previous year.
What is a specified bank?
Not every bank counts.
A “specified bank” means a scheduled bank that has been appointed as an agent of the Reserve Bank of India under Section 45 of the RBI Act, 1934. The list was notified vide Notification No. 98/2021.
Most large public sector banks and major private banks are covered. Still, check with your branch before you rely on this.
One more thing. The pension and the interest must come from the same specified bank. Interest from a second bank breaks the condition, even if that bank is also a specified bank.
How the bank calculates your tax
The bank does the work for you. Here is the order it follows.
- Add your pension and your interest income. This is your gross income.
- Apply the standard deduction available on pension.
- Apply the Chapter VI-A deductions you are eligible for and want to claim.
- Apply the Section 87A rebate (Section 156 under the new Act), if your total income is within the rebate limit.
- Deduct tax at the rates in force on whatever remains.
There is no separate TDS threshold for Section 194P. The bank does not stop at a fixed cut-off amount. It works out your actual tax liability and deducts that.
For context, the bank also deducts TDS on your fixed deposit interest under Section 194A — but under Section 194P it goes further and computes your full tax, so the 194A deduction is part of the same calculation, not an extra step for you.
Worked example
Take a senior citizen aged 76. Pension is Rs 6,00,000 a year. Fixed deposit interest from the same specified bank is Rs 1,50,000.
Under the new regime (the default for AY 2027-28):
| Step | Amount |
|---|---|
| Pension | Rs 6,00,000 |
| Interest from the specified bank | Rs 1,50,000 |
| Gross income | Rs 7,50,000 |
| Less: standard deduction on pension (new regime) | Rs 75,000 |
| Taxable income | Rs 6,75,000 |
| Section 87A rebate | Tax is nil, as total income is under Rs 12,00,000 |
| Tax payable | Nil |
Why is there no 80TTB deduction here? Section 80TTB (Section 153 under the new Act) lets a senior citizen deduct up to Rs 50,000 of interest income. But it is available only under the old regime. Under the new regime you cannot claim it. That is why the interest stays in the calculation above.
Under the old regime (if you opt for it):
| Step | Amount |
|---|---|
| Gross income | Rs 7,50,000 |
| Less: standard deduction on pension (old regime) | Rs 50,000 |
| Less: Section 80TTB (up to Rs 50,000) | Rs 50,000 |
| Taxable income | Rs 6,50,000 |
Under the old regime, the basic exemption limit is Rs 3,00,000 for a senior citizen aged 60 to 79. For a super senior citizen aged 80 or more, it is Rs 5,00,000. A taxable income of Rs 6,50,000 sits above both. So tax would be payable at slab rates, and the bank would deduct it.
For a 76-year-old, the old-regime tax on Rs 6,50,000 works out to Rs 40,000 — 5% on Rs 2,00,000 (Rs 3,00,000 to Rs 5,00,000) plus 20% on Rs 1,50,000 (Rs 5,00,000 to Rs 6,50,000) — plus 4% cess of Rs 1,600, a total of Rs 41,600. In this example the new regime (nil tax) is clearly better, which is why the bank will normally compute tax under the new regime unless you ask for the old one.
Which regime suits you depends on your own numbers. Compare both before you decide. Our guide to senior citizen tax benefits, slabs and deductions walks through the two regimes side by side.
What changed in 2026
The new Income-tax Act 2025 came into force on 1 April 2026. It applies to the tax year 2026-27, which is AY 2027-28.
The relief continues. Only the references change.
| Item | Old Act | New Act (AY 2027-28) |
|---|---|---|
| TDS provision | Section 194P | Section 393(1), Table Sl. No. 8(iii) |
| Payment code | — | 1032 |
| Declaration form | Form 12BBA (Rule 26D) | Form 125 (Income-tax Rules 2026, Rule 208) |
| Return-filing exemption | Section 194P scheme | Section 263(8)(b) |
The conditions themselves are unchanged. Resident status, age 75 or more, pension plus interest from one specified bank, and correct tax deduction by the bank. The new Act defines a “specified senior citizen” in Section 402(39).
One correction worth knowing: some early guides said Section 194P became Section 392 under the new Act. That is wrong. Section 392 covers TDS on salary. The 194P relief sits in Section 393(1), Table Sl. No. 8(iii).
When the exemption does not apply
Any income beyond pension and interest from that one specified bank breaks the condition. You must file a return. Common examples:
- Rent from a house, shop or land
- Capital gains from shares, mutual funds, property or gold
- Dividends from shares or mutual funds
- Interest from another bank
- Interest from a post office scheme
- Interest from company deposits or bonds
- Business or professional income
- Salary from a job
- Winnings from lotteries, card games or betting
Two other situations also rule out the relief. If you are not a resident in that year, it does not apply. If you are under 75 during the previous year, it does not apply.
If your income mix is wider than pension and interest, check the ITR filing dates and new-Act changes for AY 2027-28 to see which return form and deadline apply to you.
Form 125: how to submit
Under the new Act, the declaration is Form 125. Under the old Act it was Form 12BBA. Both do the same job.
- Where to submit: at your specified bank branch. This is the branch paying your pension and crediting your interest.
- When to submit: before the bank begins deducting tax for that year. Do it at the start of the tax year.
- How often: once every tax year. The declaration covers a single year only. A fresh form is needed each year.
- What it asks for: your name, PAN and date of birth, the tax year, your pension details, your expected interest income, the deductions you want the bank to consider, and a declaration that you have no other income.
If other income shows up later in the year, withdraw the declaration and file a return.
What if the bank deducts too much or too little tax?
Too much tax deducted. You are entitled to a refund. But a refund is normally claimed through a return. So if you expect money back, filing a return is the practical route, even though you did not have to.
Too little tax deducted. The shortfall is still your responsibility. It does not vanish because you skipped the return. Interest and other consequences can follow.
Either way, check your Form 26AS (Form 168 under the new Act) and your Annual Information Statement (AIS) on the income tax portal. These show the tax the bank has credited against your PAN. Compare that with what you expect. Our pension income tax guide explains how pension is taxed and what to check in these statements.
FAQ
1. Do senior citizens above 75 need to file ITR?
No, if all four conditions are met. You must be a resident, aged 75 or more during the previous year, with only pension and interest from the same specified bank as income. The bank must also deduct the correct tax. If any condition fails, a return is required.
2. What is Form 12BBA and Form 125?
They are the same declaration under two different laws. Form 12BBA belongs to the old Income-tax Act 1961, under Rule 26D. Form 125 belongs to the new Income-tax Act 2025, under Rule 208 of the Income-tax Rules 2026. You give it to your bank to claim the no-filing relief.
3. What are the conditions for exemption under Section 194P?
Four. You must be a resident. You must be 75 or more during the previous year. Your only income must be pension plus interest from the same specified bank. And the bank must deduct the correct tax.
4. Can a senior citizen above 75 still file ITR if they want to?
Yes. The relief is optional. Many people file anyway to claim a refund, to support a visa application, or simply to keep a clean income record.
5. What happens if a senior citizen has income other than pension and interest?
The relief does not apply. Even a small amount of rent, dividend, capital gains, or interest from another bank means you must file a return. The bank cannot account for income it does not know about.
6. Is Section 194P an exemption from tax or only from filing the return?
Only from filing. Tax is still payable on income above the exemption limit. The bank works out your total income, applies the deductions and the rebate, and deducts whatever tax is due.
7. Which bank is a specified bank under Section 194P?
A scheduled bank appointed as an agent of the RBI under Section 45 of the RBI Act, 1934. The list was published in Notification No. 98/2021. Ask your branch whether it is covered.
Official Sources
- Income Tax Department e-filing portal: incometax.gov.in
- Income Tax Department website: incometaxindia.gov.in
- Central Board of Direct Taxes (CBDT), the policy-making body under the Department of Revenue, Ministry of Finance
For the exact text of the provisions, forms and notifications, check these official sources. Rules and limits can change with each Finance Act.
Reviewed by Asuthod Rathod, CA. Last updated: 15 November 2026.
This article is general information for Indian readers. It is not tax advice. Your own case depends on your age, income sources, bank and regime choice. Please speak to a qualified tax professional before you act.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.