How to Save Tax for Senior Citizens in India 2026

The Income Tax Act provides various benefits for senior citizens, including tax exemptions, tax deductions, and relief from certain tax compliance activities. While some deductions are available only under the old regime, there are benefits available irrespective of regime, which can be utilised by proper investment planning.

Tax Benefits and Exemptions Available for Senior Citizens

Higher Income Exemption Limit

• Senior citizens are required to pay tax on the income of Rs. 3 lakhs under the old tax regime. 
• This limit is Rs. 5 lakhs for super senior citizens. 
• This benefit is not available for ordinary individuals as the limit is Rs. 2.5 lakhs for them.

Standard Deduction

• If they are earning a salary or pension income, they can claim a deduction of Rs. 50,000 from such income. 
• For FY 2025-26, the standard deduction amount is Rs. 75,000 under the new tax regime. 

Rebate under Section 87A

• If taxable income is up to Rs. 5 lakhs, then the senior and super senior citizens can claim rebate from tax under the old tax regime, i.e. they are not required to pay any tax. 
• Whereas under the new tax regime, the total income limit is up to Rs. 12 lakhs and rebate can be claimed up to Rs.60,000. 

Exemption from Advance Tax Payment

• Senior citizens are not required to pay advance tax if they do not earn any income from business or profession. 
• Therefore, no interest is levied on the late payment of advance tax.

Tax Deductions for Senior Citizens

Higher Deduction for Medical Insurance Premium

• Under the old tax regime, a deduction can be claimed on medical insurance premiums under section 80D
• For senior citizens and super senior citizens, the maximum limit is Rs. 50,000 as against Rs.25,000 for other taxpayers.
• This same deduction cannot be claimed under the new tax regime.

Higher Deduction for Specified Disease Treatment

• They can claim a flat deduction of Rs. 1 lakh in respect of medical expenses incurred for specified diseases under Section 80DDB.

Higher Deduction for Bank and Post Office Interest

• Senior citizens taxpayers can claim a total deduction of up to Rs. 50,000 in respect of interest earned from savings bank accounts, bank deposits, post office deposits, or cooperative bank deposits under Section 80TTB. 
• While people below 60 years of age can claim a deduction only up to Rs 10,000 on interest earned in a savings bank account.

Capital Gains Tax for Senior Citizens - Reverse Mortgage Scheme

• The reverse mortgage scheme is a popular post-retirement income stream in India.
• Under this scheme, the senior citizens mortgage their house to a lender bank. The bank provides loans in monthly instalments. 
• When the senior citizens die or choose to settle the loan, the bank will sell the house on the borrower’s behalf and use the sale proceeds to repay the loan.
• Any excess money will be repaid to the borrower.
• On such a sale, the senior citizen is not required to pay any capital gains tax on such a transfer.

Tax-Saving Instruments for Senior Citizens - Senior Citizens Savings Scheme

• Senior citizens over 60 years of age can invest in the Senior Citizens Savings Scheme and claim a deduction up to Rs. 1.5 lakhs under Section 80C.
• This deduction is available only under the old tax regime.
• This scheme also ensures regular and higher interest payouts. The same deduction cannot be claimed under the new tax regime.

When are Senior Citizens not Required to File an Income Tax Return?

Senior citizens are not required to file income tax returns, subject to the  satisfaction of all the following conditions:

• Their age is 75 years or more
• Total income consists of only pension and interest income. Interest income can be from any account maintained with the same bank that pays their pension.
• They have submitted a declaration to the bank
• TDS is deducted by such a bank under Section 194P.

Tax Filing Tips for Senior Citizens

1. Determine if you are a Senior Citizen or a Super Senior Citizen: Senior citizens are those residents who have crossed 60 years of age, and super senior citizens are those aged 80 and above. Since the Basic exemption limit has been further relaxed for super senior citizens (Rs 3 lakhs for senior citizens and Rs 5 lakhs for super senior citizens), knowing this will help claim the correct basic exemption limit.
2. Determine Residential Status: If you are a non- resident, you are not eligible for many tax-saving deductions and exemptions available exclusively for senior citizens. Determination of residential status helps avoid undue deductions and exemption claims, as well as ill-informed tax planning.
3. Advance Tax Relief: If you are a senior citizen without business income, you are exempt from paying advance taxes before the end of the financial year.
4. Exemption from ITR Filing: If you satisfy the conditions prescribed under section 194P, you need not file ITR for the particular financial year, since TDS has already been deducted from your income.

Conclusion

Being a senior citizen in India provides access to a plethora of tax benefits under the old regime. While there are a few benefits still available under the new regime, like the  reverse mortgage scheme, exemption from advance tax payment and ITR filing etc, it is wise to determine the most beneficial regime for you and make the tax saving investments accordingly.

Alos read: How To Save Taxes Under The New Regime 2026