Form 15H, Senior Citizens, and the ₹12 Lakh Rebate: Tax Tips for FY 2025–26
Query 1]
In the New Tax Regime (NTR), the exemption limit is ₹ 7 lakh. In 2023, the Finance Minister said there will be no tax for those whose income is below ₹ 7.27 lacs. I am a super senior and my income from pension and interest on Bank deposit is approximately ₹ 7.15 lakh for financial year 2024-25. Whether I will have to pay tax or I will be exempted from paying tax? In which ITR form I should file my income tax return? Please guide.
Opinion:
Great question, Mr. Yadwadkar ji—and a common one this time of year! With pension slips in one hand and tea in the other, let’s sort out the confusion.
1. A Quick Recap – New Tax Regime:
The New Tax Regime [Section 115BAC] offers concessional tax rates in exchange for forgoing most deductions and exemptions. From FY 2024–25, the government made it the default tax regime. Taxpayers can still choose the old regime, but they must opt for it explicitly while filing their return.
There is no special benefit to senior or super senior citizens under NTR. For the FY 2024–25, these slab rates apply to all individuals alike, as under
a) For income up to ₹3 Lakh – Nil. (b) For income between ₹ 3 Lakh to ₹ 7 Lakh – 5% (c) For income between ₹ 7 Lakh to ₹ 10 Lakh – 10%
(d) For income between ₹ 10 Lakh to ₹ 12 Lakh –1 5% (e) For income between ₹ 12 Lakh to ₹ 15 Lakh – 20% (f) For income above ₹ 15 Lakh – 30%.
2. Section 87A Rebate – No Tax Up to ₹7 Lakh:
One of the key benefits of the New Regime is the full rebate under Section 87A for taxable income up to ₹ 7 Lakh. If your net taxable income (after deductions allowed under NTR) is up to ₹7,00,000, the entire tax liability is waived.
3. Standard Deduction of ₹75,000:
The standard deduction for salaried taxpayers & pensioners under the New Tax Regime has been increased to ₹75,000/-. Similarly, the deduction limit towards family pension is also increased to ₹ 25,000/-.
4. ITR Forms:
Taxpayers without any business income can now file income tax returns in ITR-1 or ITR-2. Now, taxpayer with Long-Term Capital Gains (LTCG) under Section 112A can also file return in ITR – 1 subject to the condition that –
a) The LTCG amount does not exceed ₹1.25 lakh;
b) There is no capital loss to be carried forward or set off;
[Earlier, taxpayers with any capital gains were not able to file the return in ITR-1 or ITR-4]
In your specific case, you will be eligible for standard deduction of ₹ 75,000/-and as a result your total income would be reduced to ₹ 6.40 Lakh. The tax liability on this income would be ₹ 17,000/- and since your income is less than ₹ 7 Lakh, the entire amount of ₹ 17,000/- would be eligible for tax rebate U/s 87. As such, there will not be any tax liability on you. You can file your income tax return using ITR—1.
Query 2]
I have a query related to submission of Form No. 15H to the bank as I am a retired person of Age 65 years completed and still doing little professional work. I wish to avoid the TDS on my interest income. My Tentative Income for FY 2025 – 2026 is likely to be as under:
1. Income From SBI – Senior Citizen Saving Scheme – Interest – ₹2.46 Lakhs
2. Interest on HDFC FDR – ₹2.60 Lakhs
3. Interest on Banks’ Saving Accounts – ₹1.00 Lakhs
4. Dividend received on Equity Shares – ₹0.80 Lakhs
5. Income from Professional Fees – ₹4.00 Lakhs
6. Long Term Capital Gains on Equity Shares – ₹1.00 Lakhs
7. Short Term Capital Gains on Shares – ₹0.50 Lakh.
I shall also be making a deposit of ₹ 1.50 Lakhs to my SBI PPF A/c. This is my tentative income for FY 2025 – 2026 and may vary + / – 5 %. Kindly advise in such case, what will be my Income Tax liability for FY 2025-2026 and whether I
should submit Form 15 H to my Bank / HDFC?
Opinion:
Mr. Chawra ji, you’re living the best of both worlds—retired but not tired, earning too! The Income Tax Department isn’t as cheerful when it comes to capital gains. Let us have a look at the issue raised by you –
1. Form No. 15H is like a “Do Not Disturb” sign for banks — it can be submitted by a resident senior citizen individual aged 60 or above, if their tax liability is nil.
2. By the Finance Act 2025, significant changes have been made to section 87A for resident individuals opting under NTR. The income threshold has been increased from ₹ 7 Lakh to ₹ 12 Lakh and the maximum amount of rebate has also been increased from ₹ 25,000/- to ₹ 60,000/-. It means that if the taxpayers net taxable income (excluding incomes taxed at special rates) does not exceed ₹ 12 lakh, they can avail a rebate up to ₹ 60,000. However, it has been specifically provided that the income liable for special rate will not be eligible for rebate U/s 87A. In respect of shares sold through the stock exchange, the tax rate is 20% on Short-Term Capital Gains (STCG) & @12.50% in respect of Long-Term Capital Gains (LTCG). This gain would be taxable even if the total income is less than ₹ 12 Lakh.
3. In your case, the total income including LTCG is ₹ 12.36 Lakh. Since your income excluding LTCG & STCG is below ₹ 12 Lakh, you would be entitled for full tax rebate U/s 87A on all your income except capital gain income. Moreover, LTCG on equity shares of ₹ 1 lakh is fully exempt under section 112A (limit of ₹ 1.25 lakh per year). So, it does not affect tax liability. However, your STCG of ₹ 0.50 Lakh will be taxable. As such, there will be a tax liability in your hands of ₹ 10,000/-.
4. Since you have a tax liability, you cannot file Form No. 15H so as to avoid the TDS on your interest income.
5. If you or any other senior citizen with above income composition wish to avoid TDS anyhow by submitting Form No. 15H:
Try to:
a)Keep STCG at ₹ 0
b)Ensure LTCG stays within ₹25 lakh
c)Keep total income (excluding special rate income) below ₹12 lakh.
Conclusion:
Form 15H is helpful, but only if there’s zero tax. A small capital gain can make a big difference. So plan smart, file right, and may your refunds be swift and plentiful!
[Views expressed are the personal view of the author. Readers are advised to seek professional advice before taking any decisions. Readers may forward their feedback & queries at nareshjakhotia@gmail.com. Other articles & response to queries are available at www.theTAXtalk.com]
