ITR filing 2026 for pensioners: Health insurance, bank interest — These key deductions can reduce your tax outgo
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Pensioners filing ITR for Assessment Year 2026-27 (FY 2025-26) can choose from multiple ITR forms based on income profile, with pension income taxed under "Income from Salary" making them eligible for the standard deduction.
- Sections 80C, 80D, 80DDB and 80TTB deductions are available only under the old tax regime; new-regime filers forfeit these breaks but retain the standard deduction and may qualify for a Section 87A rebate if taxable income falls within the threshold.
- Senior citizens can claim up to ₹50,000 deduction under Section 80TTB on interest earned from bank deposits, savings accounts, and similar instruments.
- Section 80C has been restructured and consolidated under Section 123 of the Income Tax Act 2025, retaining the ₹1.5 lakh annual cap on eligible investments and expenditures including health insurance premiums.
- Resident senior citizens without business or professional income are exempt from paying advance tax under Section 207, unlike other taxpayers whose estimated liability exceeds ₹10,000 under Section 208.
- Individuals aged 80 and above can continue filing ITR-1 and ITR-4 through paper mode, and banks apply a higher TDS threshold before deducting tax on senior citizens' interest income.
Why it matters: Choosing the new tax regime costs retirees deductions worth up to ₹50,000 on bank interest (80TTB) and the full ₹1.5 lakh 80C/123 investment basket — making the old-regime route materially more rewarding for pensioners with health insurance premiums, fixed deposits, and housing-loan interest. The Section 207 advance-tax exemption also spares senior citizens without business income from quarterly tax payments.
Ask SkimNews
