Senior citizen investor asks: How do I maximise pension and FD income without paying extra tax?

I am a 72-year-old resident senior citizen and have a pension income of Rs 6 lakh per year, along with interest income of Rs 1.5 lakh from my fixed deposits in a bank. I do not have any business or professional income. I want to know:

Can I opt for the new tax regime or should I stay in the old tax regime? Which one will be more beneficial for me considering deductions and exemptions?

Am I eligible to submit Form 15H to avoid TDS on my interest income?

What is the standard deduction for my pension income under both regimes?

Do I need to file my income tax return manually or electronically?

Can I claim additional deductions for health insurance, medical expenses, or dependents under Sections 80D, 80DD, or 80DDB?

Do I need to pay advance tax this year?

Income Tax Rules for Senior and Super Senior Citizens

The Income Tax Act provides specific reliefs and procedural advantages for senior citizens (aged 60–79 years) and super senior citizens (aged 80 years and above) for Assessment Year (AY) 2025-26. These include higher exemption thresholds, enhanced deductions for medical expenses, pension, and interest income, as well as simplified tax filing options. Taxpayers in these categories can choose between the old and new tax regimes, each with distinct implications for deductions and tax rates. Mechanisms such as Form 15H and manual return filing further streamline compliance, reducing the financial burden on India’s ageing population.

Definitions and Tax Regimes

Senior Citizens: Residents aged 60 years or above but less than 80 years.

Super Senior Citizens: Residents aged 80 years or above.

Taxpayers can opt for:

Old Tax Regime: Offers higher exemption limits and more deductions.

New Tax Regime: Applies uniform slab rates but limits exemptions and deductions.

Under the old regime, exemption slabs differ by age; in the new regime, slabs are uniform for all individuals.

Exemption Limits and Deductions

For AY 2025-26:

New Regime: Basic exemption limit is Rs 3 lakh for both senior and super senior citizens.

Old Regime: Rs 3 lakh for seniors; Rs 5 lakh for super seniors.

The old regime allows multiple deductions and exemptions, while the new regime provides concessional tax rates but fewer benefits.

Deductions for Medical and Pension Income

Medical Expenses (Section 80D): Up to Rs 50,000 for expenses not covered by insurance (cash payments excluded).

Pension Income: Standard deduction under the new regime increased to Rs 75,000 (from Rs 50,000 in AY 2024-25); remains Rs 50,000 under the old regime.

Additional Deductions:

Maintenance of dependents with disabilities (Section 80DD) – up to Rs 1,25,000.

Expenses on specified ailments (Section 80DDB) – up to Rs 1,00,000 depending on severity.

Interest Income and Reverse Mortgage Exemptions

Section 80TTB: Deduction up to Rs 50,000 on interest from savings and fixed deposits.

Reverse Mortgage Loans: Amount received is not taxable; transfer of residential property remains exempt from capital gains tax.

Filing Requirements

Senior citizens aged 75+ with only pension and interest income from the same bank may be exempt from filing if TDS is deducted.

Super senior citizens can file paper returns using ITR-1 (Sahaj) or ITR-4 (Sugam) if total income exceeds Rs 5 lakh or if a refund is due; e-filing is optional.

Non-Deduction of TDS and Advance Tax Relief

Form 15H: Seniors can submit this self-declaration to prevent TDS on certain income if their total tax liability is nil.

Residents without business or professional income are exempt from paying advance tax.

Section 87A Rebate and TDS Impact

Rebates under Section 87A (for residents with taxable income up to Rs 12 lakh under the new regime from AY 2026-27) can be claimed to reduce TDS on interest income.

If the total income after rebate is nil, Form 15H ensures no TDS is deducted on fixed deposit interest.