Section 194P

Section 194P is now Sections 402(39), 393(1) serial 8(iii) and 263(8)(b): a pensioner aged 75 with only pension and same-bank interest files no return.

Updated 1 October 2026

Section 194P is the provision of the repealed Income-tax Act 1961 under which a resident aged 75 or more, whose only income was pension and interest from the bank paying the pension, filed no income-tax return once that bank had deducted the full tax for the year. From 1 April 2026 the same relief is in three provisions of the Income-tax Act 2025: Section 402(39), which defines the specified senior citizen; Section 393(1) Table serial 8(iii), which makes the specified bank compute and deduct the tax; and Section 263(8)(b), which removes the duty to file.

The relief is narrow. It applies only where every rupee of income is pension, or interest from accounts in the very bank that pays the pension, and only after the pensioner has given that bank a declaration in Form No. 125 under rule 208 of the Income-tax Rules 2026, the successor to Form 12BBA. Rent, a capital gain, a dividend, or ten rupees of interest from a second bank take the pensioner outside it.

It is relief from filing, not from tax. The bank computes the total income after the Chapter VIII deductions and the Section 156 rebate and deducts tax at the rates in force, so a pensioner aged 80 with a large pension pays the same tax as anyone else of the same age. What the pensioner saves is the return itself, and that saving matters most where income is above the basic exemption but the tax is nil, the position of any pensioner in the new tax regime whose total income is above Rs. 4,00,000 but not above Rs. 12,00,000.

Section 536(2)(c) of the 2025 Act continues the repealed Act, Section 194P included, for proceedings in respect of tax years beginning before 1 April 2026, so the 2025-26 year still runs on Section 194P and Form 12BBA. The sections below set out the conditions, the bank’s computation, the regime, what disqualifies a pensioner, worked figures, and the cases in which a specified senior citizen should still file.

Which provision applies to which tax year

Section 536(1) of the Income-tax Act 2025 repealed the 1961 Act from 1 April 2026, and Section 536(2)(c) continues it for any tax year beginning before that date.

Tax year	Governing provisions	Declaration
2025-26 and earlier	Section 194P, Income-tax Act 1961	Form 12BBA, Income-tax Rules 1962
2026-27 onward	Sections 402(39), 393(1) Table serial 8(iii) and 263(8)(b), Income-tax Act 2025	Form No. 125, rule 208, Income-tax Rules 2026

Provisions governing the specified senior citizen relief by tax year, under Section 536(2)(c) of the Income-tax Act 2025.

Section 194P was inserted by Section 53 of the Finance Act 2021 (No. 13 of 2021), in force from 1 April 2021 under Section 1(2)(a) of that Act. CBDT Notification No. 99/2021, G.S.R. 612(E) dated 2 September 2021, inserted rule 26D and Form 12BBA into the Income-tax Rules 1962, with the declaration to be furnished in paper form, and Notification No. 98/2021, S.O. 3595(E) of the same date, specified the banks. Form 12BBA asked for seven particulars, including the employer from which the pension is drawn and the Pension Payment Order number.

The 2025 Act carried the substance across without change. Section 194P(1) began “Notwithstanding anything contained in the provisions of Chapter XVII-B”; Note 5 to the Table in Section 393(1) provides that “the provisions of serial number 8(iii) shall take precedence over any other provisions of this Chapter”. Section 194P(2) said that “the provisions of section 139 shall not apply”; Section 263(8)(b) says that “the provisions of this section shall not apply” to a specified senior citizen for the tax year in which tax has been deducted. The definition in the Explanation to Section 194P moved, word for word in substance, to Section 402(39).

Section 194P and its successors compared

Element	Section 194P and the 1962 Rules	Income-tax Act 2025 and the 2026 Rules
Definition of specified senior citizen	Explanation (b) to Section 194P	Section 402(39)
Definition of specified bank	Explanation (a) to Section 194P	Section 402(35)
Banks specified	Notification No. 98/2021, 2 September 2021	The same notification, carried by Section 536(2)(j)
Bank’s duty to compute and deduct	Section 194P(1), “Notwithstanding anything contained in the provisions of Chapter XVII-B”	Section 393(1) Table serial 8(iii), with Note 5 giving it precedence over the Chapter
Deductions and rebate given effect to	Chapter VI-A and Section 87A	Chapter VIII and Section 156
Relief from filing	Section 194P(2), Section 139 not to apply	Section 263(8)(b)
Declaration	Form 12BBA under rule 26D, in paper form under rule 26D(1)	Form No. 125 under rule 208, with no mode stated in rule 208(1)
Bank’s record-keeping	Rule 26D	Rule 208(4), records available to the Chief Commissioner of Income-tax

Section 194P of the Income-tax Act 1961 and its successor provisions in the Income-tax Act 2025, compared by salary-calculator.in.

Two differences in the subordinate rules are visible in the table. Rule 26D(1) of the 1962 Rules required Form 12BBA “to be furnished in paper form duly verified”, while rule 208(1) of the 2026 Rules says only that the declaration “may be furnished” in Form No. 125. And Form 12BBA, notified in 2021 when the new regime under Section 115BAC of the repealed Act had to be opted into, carried no field for the tax regime, whereas the department’s note on Form No. 125, under an Act whose new regime is the default, lists the regime among its particulars.

Who is a specified senior citizen

Section 402(39) of the Income-tax Act 2025 defines a “specified senior citizen” as an individual, being a resident in India:

(a) who is of the age of seventy-five years or more at any time during the tax year; (b) who is having pension income and no other income except the interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and (c) has furnished a declaration to the specified bank containing particulars, in such form and verified in such manner as may be prescribed;

Each clause is a condition, and the pensioner must meet all three for the tax year.

Condition	Met	Not met
Resident in India	Resident under Section 6 for the tax year	Non-resident, for example after a year abroad with family
Aged 75 or more at any time in the tax year	Turns 75 on or before 31 March 2027, for 2026-27	Turns 75 after 31 March 2027
Pension income	Central civil, defence or railway pension, with dearness relief and additional pension	No pension, or pension paid by a different bank from the interest
No other income except interest from the same specified bank	Savings, fixed and recurring deposit interest in the pension bank	Rent, capital gains, dividends, another bank’s interest, post office scheme interest
Declaration to the bank	Form No. 125 furnished	No declaration, or given to a bank that does not pay the pension

Conditions in Section 402(39), Income-tax Act 2025, and rule 208, Income-tax Rules 2026, for the tax year 2026-27.

Age is reached at any time in the year. A pensioner born on 10 January 1952 turns 75 on 10 January 2027 and is 75 “at any time during the tax year” 2026-27, so qualifies for the whole year if the other conditions hold.

Pension income. Section 402(39)(b) uses the words “pension income” without defining them. A central civil, defence or railway pension with its dearness relief and additional pension is plainly within them. A family pension is less certain: it is taxed under “Income from other sources” with the Section 93(1)(d) deduction, not as salary, and both Form 12BBA and the Income Tax Department’s note on Form No. 125 ask for the employer from which the pension is drawn and the Pension Payment Order number without mentioning family pension. A family pensioner who relies on the route is taking a position on undefined words; filing a return removes the question.

The same bank. The interest must come from “any account maintained by such individual in the same specified bank in which he is receiving his pension income”. A pensioner whose pension is credited to a State Bank of India account and who holds fixed deposits in the same bank qualifies. One who also holds a Senior Citizens’ Savings Scheme account at the post office does not, because post office interest is income other than interest from the pension bank. Moving the deposits into the pension bank is the only route to the relief for such a pensioner.

The declaration. Rule 208(1) of the Income-tax Rules 2026 prescribes Form No. 125, furnished by the specified senior citizen to the specified bank. Rule 208(4) requires the bank to maintain the declaration and the evidence of deductions and make them available to the Chief Commissioner of Income-tax when required.

The specified bank

Section 402(35) of the Income-tax Act 2025 defines a “specified bank” as “a banking company as the Central Government may, by notification, specify”. The relief is only available through such a bank: a pensioner whose pension is paid by a bank that has not been notified cannot qualify, however simple the income. A pension credited to a co-operative bank or a small finance bank that is not an agency bank of the Reserve Bank of India has to move to an agency bank before the route is open, and the deposits have to move with it, because the interest must come from the same bank.

A Form 12BBA given to the bank before 1 April 2026 was a declaration under Section 194P for the tax year 2025-26 and earlier. For 2026-27 the declaration is Form No. 125, which rule 208(1) of the Income-tax Rules 2026 prescribes.

CBDT Notification No. 98/2021, S.O. 3595(E) dated 2 September 2021, issued under Section 194P of the 1961 Act, specifies the banks by description, not by name: “a banking company which is a scheduled bank and has been appointed as agents of Reserve Bank of India under section 45 of the Reserve Bank of India Act, 1934”. Every scheduled bank that is an agency bank of the Reserve Bank of India therefore qualifies, public or private; the notification names no individual bank.

Section 536(2)(j) of the Income-tax Act 2025 deems a notification issued under the repealed Act, so far as it is not inconsistent with the corresponding provisions of the 2025 Act, to have been issued under the corresponding provision. Read with that clause, the 2021 notification is the instrument that answers to Section 402(35) until the Central Government notifies otherwise.

How the bank computes and deducts the tax

Section 393(1) Table serial 8(iii) of the Income-tax Act 2025 names the “total income of a specified senior citizen after giving effect to deduction allowable under Chapter VIII and rebate allowable under section 156” as the income, the specified bank as the person responsible, and “rates in force” as the rate. Rule 208(2) of the Income-tax Rules 2026 repeats the computation: the bank, “after giving effect to the deduction allowable under Chapter VIII and rebate allowable under section 156, compute the total income of such specified senior citizen for the relevant tax year and deduct income-tax on such total income, on the basis of the rates in force”.

In effect the bank does the assessment that a return would otherwise do:

pension, dearness relief and additional pension for the year, less the standard deduction under Section 19(1) Table serial 2;
plus interest from the pensioner’s accounts in the bank;
less Chapter VIII deductions on the evidence furnished under rule 208(3);
tax at the slab rates of the regime, less the Section 156 rebate, plus health and education cess, and surcharge where income is high enough.

Note 5 to the Table under Section 393(1) gives serial 8(iii) precedence over every other provision of the Chapter on deduction at source. The bank therefore does not also deduct under Section 392 on the pension as salary or under serial 5(ii) on the interest; the whole deduction for the year is under serial 8(iii).

Regime and deductions

The bank computes on the default new tax regime in Section 202(1) unless told otherwise. The Income Tax Department’s note on Form No. 125 lists among the particulars of the declaration whether the pensioner is opting for the new tax regime, so the declaration is where the regime is recorded for the bank. Section 202(4)(b) of the Income-tax Act 2025 and rule 136 of the Income-tax Rules 2026 tie the option to leave the new regime to the return of income, and neither mentions a specified senior citizen who files none. In both worked examples below the new regime gives the lower tax.

Rule 208(3) of the Income-tax Rules 2026 has the bank give effect to Chapter VIII deductions “based on the evidence furnished by the specified senior citizen during the tax year”. The common claims for a pensioner aged 75 or more are:

Deduction	Section, 2025 Act	Limit for a senior citizen (Rs.)	Evidence
Health insurance premium	126	50,000 per group	Premium receipt, paid other than in cash
Treatment of a specified disease	128	1,00,000	Specialist’s prescription in the rule 62(4) format, bills
Interest on deposits	153(2)(b)	50,000	The bank’s own records
Savings and investments	123 with Schedule XV	1,50,000	Investment proof

Chapter VIII deductions a specified bank can give effect to under rule 208(3), Income-tax Rules 2026, old regime only.

A deduction not evidenced to the bank during the year is not lost: the pensioner can file a return for that year and claim it there.

Worked examples

A pensioner aged 78 with nil tax

A retired Assistant Section Officer aged 78 draws pension and dearness relief of Rs. 70,000 a month, Rs. 8,40,000 for 2026-27, from a specified bank, and earns Rs. 1,20,000 of fixed-deposit interest in the same bank. There is no other income.

In the new regime the bank computes Rs. 8,40,000 less the Rs. 75,000 standard deduction plus Rs. 1,20,000 of interest, a total income of Rs. 8,85,000. Slab tax under the Table to Section 202(1) is Rs. 20,000 on the 5% band and Rs. 8,500 on the 10% band, Rs. 28,500, and the Section 156(2)(a) rebate cancels it. The bank deducts nothing.

Without the specified-senior-citizen route the pensioner would still have to file. Section 263(1) requires a return where total income exceeds the maximum amount not chargeable to tax, and Rs. 8,85,000 is above the Rs. 4,00,000 nil slab even though the rebate makes the tax nil. With Form No. 125 given to the bank and the deduction under serial 8(iii) made, Section 263(8)(b) removes that duty.

A super-senior pensioner aged 81 with tax payable

A retired Director aged 81 draws pension, additional pension and dearness relief of Rs. 1,30,000 a month, Rs. 15,60,000 for the year, and earns Rs. 1,50,000 of interest in the same specified bank.

Step	New regime (Rs.)
Pension less standard deduction	14,85,000
Interest	1,50,000
Total income	16,35,000
Slab tax	1,27,000
Rebate, Section 156	Nil, income above Rs. 12,70,588
Cess at 4%	5,080
Tax deducted by the bank	1,32,080

Tax year 2026-27, Table to Section 202(1), Income-tax Act 2025. Computed by salary-calculator.in.

Slab tax is Rs. 20,000 on Rs. 4,00,001 to Rs. 8,00,000, Rs. 40,000 on the next Rs. 4,00,000, Rs. 60,000 at 15% on Rs. 12,00,001 to Rs. 16,00,000 and Rs. 7,000 at 20% on the last Rs. 35,000. The bank spreads Rs. 1,32,080 over the year’s pension credits and the pensioner files no return. In the old regime, on the Paragraph A(III) table for those aged 80 and above, the same income with Rs. 1,50,000 of deductions including the standard deduction would carry Rs. 2,68,000 of slab tax, so the new regime is the right basis for this pensioner, and the super-senior citizen taxation article sets out how large old-regime deductions must be before that changes.

When a specified senior citizen should still file

Section 263(8)(b) of the Income-tax Act 2025 removes an obligation; it does not bar a return. A specified senior citizen files a return under Section 263(1) for the tax year in four situations:

Excess deduction. Where the bank has deducted more than the tax due, a refund needs a return.
A deduction not given effect to. Where a Chapter VIII claim was not evidenced to the bank in time, the return carries it.
Income outside the definition, found later. A capital gain on a house sold in March, or interest from an old deposit at another bank, means the pensioner was never a specified senior citizen for that year, and the ordinary duty to file under Section 263(1) applies from the start.
A loss to carry forward. A loss cannot be carried forward without a return.

A pensioner who files late in the third situation pays the late fee in Section 428, the successor to Section 234F, where it applies. Pensioners aged 80 or more who file may use a paper ITR-1 under rule 164(12) Table serial 4 of the Income-tax Rules 2026.

The specified-senior-citizen relief sits alongside three other age provisions, each with a different trigger:

Provision	Age	Effect
Section 403(3), Income-tax Act 2025	60	No advance tax without business or professional income
Section 393(1) Table serial 5(ii) and the Note to Section 393(6)	60	Rs. 1,00,000 threshold for deduction at source on bank interest; Form No. 121 usable above the basic exemption
Sections 402(39), 393(1) Table serial 8(iii), 263(8)(b)	75	No return where the specified bank deducts the tax
Paragraph A(III), Part I-B, First Schedule, Finance Act 2026	80	Old-regime nil slab of Rs. 5,00,000
Rule 164(12) Table serial 4, Income-tax Rules 2026	80	Paper return in ITR-1 or ITR-4

Age-linked tax provisions for pensioners, tax year 2026-27.

The senior citizen tax article sets out all of them, and income tax for pensioners the pension-specific rules.

Common misreadings

“Pensioners over 75 are exempt from income tax.” They are exempt from filing a return, and only as specified senior citizens. The bank deducts the full tax under Section 393(1) Table serial 8(iii).

“Any pensioner over 75 qualifies.” Only one whose income is pension and interest from the same specified bank, and who has given that bank Form No. 125.

“Post office savings interest is allowed.” Section 402(39)(b) allows only interest from accounts in the bank that pays the pension.

“Deductions are lost because no return is filed.” Rule 208(3) has the bank give effect to Chapter VIII deductions on the evidence furnished, and a return can still be filed to claim anything missed.

“Section 194P still applies in 2026-27.” For the tax year beginning 1 April 2026 the provisions are Sections 402(39), 393(1) Table serial 8(iii) and 263(8)(b) of the Income-tax Act 2025.

Frequently Asked Questions (FAQs)

What is Section 194P?

Section 194P of the repealed Income-tax Act 1961 relieved a resident aged 75 or more whose only income was pension and interest from the bank paying the pension from filing a return, once that bank deducted the full tax. From the tax year 2026-27 the same relief is split across Sections 402(39), 393(1) Table serial 8(iii) and 263(8)(b) of the Income-tax Act 2025, with the declaration in Form No. 125 under rule 208 of the Income-tax Rules 2026.

Which provisions replaced Section 194P?

Three provisions of the Income-tax Act 2025. Section 402(39) defines the specified senior citizen. Section 393(1) Table serial 8(iii) requires the specified bank to deduct tax on that person’s total income after Chapter VIII deductions and the Section 156 rebate, and Note 5 to the Table gives that serial precedence over every other provision of the Chapter. Section 263(8)(b) removes the duty to file a return for the year in which the bank has so deducted.

Who is a specified senior citizen?

Under Section 402(39) of the Income-tax Act 2025, an individual resident in India who is 75 or more at any time during the tax year, who has pension income and no other income except interest received or receivable from any account maintained in the same specified bank in which the pension is received, and who has furnished the prescribed declaration to that bank. All three conditions must hold for the year.

Do pensioners above 75 have to file an income tax return?

Not if they are specified senior citizens and the bank has deducted tax under Section 393(1) Table serial 8(iii) of the Income-tax Act 2025; Section 263(8)(b) then removes the duty to file. A pensioner aged 75 with rent, capital gains, dividends, interest from a different bank or post office, or no Form No. 125 declaration is not a specified senior citizen and files in the ordinary way.

Does Section 194P mean no tax for pensioners over 75?

No. It removes the return, not the tax. Rule 208(2) of the Income-tax Rules 2026 requires the specified bank to compute the total income after Chapter VIII deductions and the Section 156 rebate and to deduct income-tax on it at the rates in force. A pensioner aged 78 with a pension of Rs. 15,00,000 pays the same tax as a 70-year-old with the same pension; only the filing is different.

What replaced Form 12BBA?

Form No. 125 under rule 208(1) of the Income-tax Rules 2026, for the tax year 2026-27 onward. The specified senior citizen furnishes it to the specified bank under Section 402(39)(c) of the Income-tax Act 2025, read with Section 393(1) Table serial 8(iii). Form 12BBA under the 1962 Rules governed the declaration under Section 194P for 2025-26 and earlier years.

Which banks are specified banks?

Section 402(35) of the Income-tax Act 2025 defines a specified bank as a banking company that the Central Government notifies. CBDT Notification No. 98/2021 dated 2 September 2021, issued under Section 194P and carried forward by Section 536(2)(j), specifies any scheduled bank appointed as an agent of the Reserve Bank of India under Section 45 of the Reserve Bank of India Act 1934, public or private. A bank outside that description cannot be a specified bank.

Can interest from another bank or the post office be included?

No. Section 402(39)(b) of the Income-tax Act 2025 allows only interest from any account maintained in the same specified bank in which the pension is received. Interest from a second bank, from a post office Senior Citizens’ Savings Scheme or Monthly Income Scheme account, or from company deposits takes the pensioner outside the definition, and the ordinary duty to file then applies.

Can a specified senior citizen claim deductions such as Section 80D?

Yes, through the bank. Rule 208(2) of the Income-tax Rules 2026 requires the bank to give effect to the deductions allowable under Chapter VIII, and rule 208(3) has it do so on the evidence the specified senior citizen furnishes during the tax year. Health insurance under Section 126, specified diseases under Section 128 and deposit interest under Section 153 are the usual claims, all of which are available only in the old regime.

Can a specified senior citizen choose the old regime?

The declaration records it. The Income Tax Department’s note on Form No. 125 lists whether the pensioner is opting for the new tax regime among its particulars, and without an election the bank computes on the default new regime under Section 202(1) of the Income-tax Act 2025. Section 202(4)(b) and rule 136 of the Income-tax Rules 2026 tie the option to a return, so a pensioner who wants the old regime and is unsure the bank has applied it can file a return for the year.

What if the bank deducts more tax than is due?

The pensioner files a return to claim the refund. Section 263(8)(b) of the Income-tax Act 2025 removes the obligation to file, not the right, and a return under Section 263(1) for that tax year allows the excess deduction to be refunded under the ordinary provisions.

When was Section 194P introduced?

By Section 53 of the Finance Act 2021, in force from 1 April 2021. CBDT Notification No. 99/2021 dated 2 September 2021 then inserted rule 26D and the declaration in Form 12BBA into the Income-tax Rules 1962, and Notification No. 98/2021 of the same date defined the specified banks as scheduled banks appointed as agents of the Reserve Bank of India. The relief carried into the Income-tax Act 2025 on 1 April 2026.

External references

References

Income-tax Act 2025 (No. 30 of 2025), Sections 402(35) and 402(39), Section 393(1) Table serial 8(iii) and Note 5 to the Table, Section 263(8)(b), in force 1 April 2026.
Income-tax Act 2025, Section 536(1) and 536(2)(c) (repeal and saving).
Income-tax Rules 2026, rule 208 and Form No. 125.
Income-tax Act 1961, Section 194P, as it stood on 31 March 2026.
Income-tax Act 2025, Section 156 (rebate), Section 202 (new regime), Chapter VIII (deductions).