Senior citizens aged 75+ with only pension and interest income can now avoid filing ITR using Form No. 125 under the new Income-tax Act, 2025. The bank computes income, deducts tax, and handles compliance—making tax filing simpler for elderly taxpayers.
Income Tax Act 2025: These taxpayers can skip ITR filing using Form 125? Rules explained
Filing an Income Tax Return (ITR) every year can be a tedious task especially for elderly taxpayers who depend mainly on pension and interest income. Recognising this challenge, the government has continued and refined a special relief mechanism under the Income-tax Act, 2025 — making compliance much simpler for certain senior citizens.
At the heart of this relief is Form No. 125, a declaration that allows eligible senior citizens to skip ITR filing altogether, provided they meet specific conditions.
What is Form No. 125 and how does it work?
“Form No. 125 is a declaration furnished by a Specified Senior Citizen under Section 393(1) [Table: Sl. No. 8(iii)] of the Income-tax Act, 2025, in respect of Pension Income and Interest received or receivable through a specified bank. TDS is accordingly deducted by the Specified Bank. Such declaration in Form No. 125 does not include any other income such as rent, commission, capital gains etc,” according to the Income Tax Department website.
The form grants specified senior citizens exemption from filing an Income-tax Return. The specified bank handles the tax computation and deduction of tax, on their behalf, says the I-T department.
In short, the bank does the tax work on behalf of the senior citizen.
However, this benefit is available only if the person is 75 years or older, they are a resident, and their income is limited to pension, interest (from the same specified bank).
No other income—like rent, capital gains, or business income—is allowed under this scheme.
Old vs new income tax laws: What has changed?
While the concept isn’t entirely new, Form No. 125 replaces the earlier system under the old income tax rule.
Earlier mechanism (under Income-tax Act, 1961)
Relief was available under Section 194P and declaration was filed in Form 12BBA. Banks handled TDS after computing taxable income and eligible seniors could avoid filing ITR.
New mechanism (under Income-tax Act, 2025)
Provision now covered under Section 393(1) and Form No. 125 replaces Form 12BBA. Updated rules under new tax framework (Rule 208).
Same concept, but aligned with the new Income Tax Act structure
What remains the same?
Age eligibility: 75+
Income restriction: Only pension + interest
Role of bank: Tax computation + TDS deduction
Benefit: No need to file ITR
What’s important to remember?
Form submission is mandatory to claim exemption and it must be submitted every year. It can be filed physically, or online via net banking. If income changes (for example, rental income arises), then the form must be withdrawn or revised and ITR filing becomes mandatory again.
Also, note that this is not a tax exemption, only an ITR filing exemption. TDS will still be deducted by the bank after tax calculation.
Why this matters
For many elderly taxpayers, especially pensioners, this move significantly reduces compliance burden. Instead of dealing with forms, portals, and deadlines, they can rely on their bank to manage tax obligations.
It’s a small but meaningful step towards simplifying taxation for senior citizens, particularly those who have straightforward income sources.
Disclaimer:
This article is intended for informational and educational purposes only and does not constitute tax advice. The provisions discussed, including those related to Form No. 125 under the Income-tax Act, 2025, are based on available guidelines, FAQs, and interpretations at the time of writing and may be subject to amendments, clarifications, or notifications issued by the government from time to time.
The exemption from filing Income Tax Returns (ITR) is available only to specified senior citizens meeting prescribed conditions, including age, residential status, and income sources limited to pension and interest from a specified bank. Taxpayers with additional income sources such as capital gains, rental income, or business income may not be eligible for this benefit and may still be required to file an ITR.
It is strongly recommended to consult a qualified tax professional or financial advisor for personalised advice based on individual circumstances. The publication and the author shall not be liable for any losses or consequences arising from reliance on the information provided in this article.
aniltikotekar4sme.com 