No Return at 75-Plus: Section 194P

A pensioner in their late seventies may draw a pension and keep a few fixed deposits, all in the same bank. Every year they have had to file an income-tax return for income that the bank already reports in full. Since 2021 the law has offered a way out. The bank computes the tax, deducts it, and the return is no longer required. The relief is narrow. It turns on a declaration, on the identity of the bank, and on the absence of any other income at all. This guide sets out who qualifies, what the bank does, and where the provision now sits under the Income-tax Act, 2025.

Which Act governs which year

• Financial year 2025-26 (assessment year 2026-27) and earlier. The provision is section 194P of the Income-tax Act, 1961, inserted by the Finance Act, 2021. The procedure is in rule 26D of the Income-tax Rules, 1962, and the declaration is in Form No. 12BBA.

• Tax year 2026-27 onwards. The 2025 Act splits the provision into three parts:

  • the bank’s duty to compute and deduct is in section 393(1), Table serial number 8(iii);
  • the definition of a “specified senior citizen” is in section 402(39), and “specified bank” is in section 402(35);
  • the release from the return is in section 263(8)(b).

  The procedure is in rule 208 of the Income-tax Rules, 2026, and the declaration is Form No. 125.

• A declaration in Form No. 12BBA relates to a previous year under the 1961 Act. A pensioner who wants the relief for tax year 2026-27 furnishes Form No. 125.

The three conditions

The Explanation to section 194P, clause (b), defines a specified senior citizen as an individual, being a resident in India:

“(i) who is of the age of seventy-five years or more at any time during the previous year; (ii) who is having income of the nature of pension and no other income except the income of the nature of 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 (iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.”

Section 402(39) of the 2025 Act repeats the three conditions for the tax year: aged seventy-five or more at any time during the tax year, “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 a declaration furnished to the specified bank.

Read closely, the conditions exclude more than they first appear to.

• Resident, and 75 or more. A non-resident pensioner never qualifies. Age is tested at any time during the year, so a person who turns 75 on the last day of the year qualifies for that year.
• Pension, and nothing else except interest. Rent, capital gains on shares or mutual funds, dividends, or any business income each take the person outside the provision.
• Interest only from the same bank. Interest from a post office deposit, from a second bank, or on bonds or company deposits also takes the person outside, even where the amount is small. Interest on a savings or fixed deposit in the bank into which the pension is credited is the only interest permitted.

The specified bank

Clause (a) of the same Explanation leaves “specified bank” to the Central Government. Notification No. 98/2021 (S.O. 3595(E), 2 September 2021) notified it to mean a banking company which is a scheduled bank and has been appointed as an agent of the Reserve Bank of India under section 45 of the Reserve Bank of India Act, 1934. In practice these are the banks that pay government pensions. A pension credited to a bank that is not such an agent cannot be handled under section 194P.

Section 402(35) of the 2025 Act also leaves the term to notification: “a banking company as the Central Government may, by notification, specify”.

The declaration: Form No. 12BBA and Form No. 125

Rule 26D(1) of the Income-tax Rules, 1962, inserted by the Income-tax (26th Amendment) Rules, 2021 (Notification No. 99/2021, G.S.R. 612(E), 2 September 2021), requires the declaration to “be in Form no. 12BBA to be furnished in paper form duly verified”. The form asks for:

• name and address;
• PAN or Aadhaar;
• the previous year;
• date of birth;
• the name of the specified bank;
• the employer from which pension is drawn; and
• the Pension Payment Order number.

In the verification, the pensioner certifies that they do “not have any income other than the income of the nature of pension and/or interest which is received or receivable only in the account(s) of the specified bank stated above”.

Rule 208(1) of the Income-tax Rules, 2026 provides that the declaration under section 402(39)© “may be furnished by the specified senior citizen to the specified bank in Form No. 125”. Rule 208 does not repeat rule 26D’s requirement of paper form.

What the bank does

Rule 26D(2) and rule 208(2) are in almost the same words. The specified bank “shall, after giving effect to the deduction allowable under Chapter VI-A [Chapter VIII in rule 208] and rebate allowable under section 87A [section 156 in rule 208], compute the total income of such specified senior citizen for the relevant … year and deduct income-tax on such total income, on the basis of the rates in force”.

Four points follow:

• Deductions need evidence. Under rule 26D(3) and rule 208(3), deductions are given “based on the evidence furnished by the specified senior citizen during the” year. These are typically health insurance premium under section 80D (section 126 of the 2025 Act), and interest on deposits under section 80TTB (section 153). A premium receipt not given to the bank is not given effect.
• The bank keeps the papers. Under rule 26D(4) and rule 208(4), the bank maintains the declaration and the evidence and makes them available to the Chief Commissioner when required. Rule 31A(3B) of the 1962 Rules, inserted by the same notification, adds a duty to furnish the evidence to the Director General of Income-tax (Systems) when required.
• The bank reports like an employer. The same notification amended rules 31 and 31A so that tax under section 194P is certified in Form No. 16 and reported in the salary statement (Form No. 24Q). Under the 2026 Rules, rule 215 puts section 393(1), serial number 8(iii) beside salary: the certificate is Form No. 130, due by 15 June after the tax year. Rule 219 puts it in the quarterly statement in Form No. 138.
• The relief is from the return, not from tax. Tax is still deducted at the rates in force. A pensioner whose income is below the taxable level after rebate simply has nothing deducted.

Release from the return

Section 194P(2) provides: “The provisions of section 139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which the tax has been deducted under sub-section (1)”. Section 263(8)(b) of the 2025 Act provides that the section on returns “shall not apply to a specified senior citizen, as referred to in section 402(39), for the relevant tax year in which tax has been deducted at source under section 393(1) [Table: Sl. No. 8(iii)]”.

Two consequences follow from the wording.

• The release is tied to the deduction mechanism. Both provisions refer to the year in which tax has been deducted under the special provision. It follows the bank’s computation, not merely the pensioner’s age.
• It does not cure a false declaration. If the pensioner in fact had other income, the conditions were not met. The ordinary duty to file under section 139(1) or section 263(1) then applies, with the consequences of a late or missing return described in Belated and Revised Returns. The verification on Form No. 12BBA is the pensioner’s own certificate that no other income exists.

Points the provisions do not settle

• The regime choice. Section 194P and rules 26D and 208 do not say whether the bank computes tax under the old regime or the new one. Under section 115BAC(6) of the 1961 Act and section 202(4)(b) of the 2025 Act, a person without business income opts out of the new regime “along with the return of income”. A pensioner released from the return has no return to opt out in. The difference between the two regimes for a pensioner is shown in Income Tax for Senior Citizens: The Basics.
• Refunds. Neither provision deals with a case where the bank deducts more than is due. A refund claim ordinarily runs through a return (see Income-Tax Refunds).

Due dates

• Declaration. No date is fixed by the Act or the rules. The bank needs the declaration and the evidence of deductions during the year, since its deduction and its quarterly statements run through the year.
• Bank’s quarterly statement and certificate. These follow the salary timetable: Form No. 24Q and Form No. 16 under the 1962 Rules, and Form No. 138 and Form No. 130 (by 15 June) under the 2026 Rules. The deposit and statement procedure is in Deducting and Depositing TDS and Quarterly TDS and TCS Statements.

What to have ready

• Proof of age. The date of birth goes in the declaration.
• PAN or Aadhaar.
• The Pension Payment Order number and the name of the pension-paying authority. These come from the pension papers.
• A list of every source of income for the year. This should be checked against the AIS for interest, dividends or sales that would break the “no other income” condition (see Reconciling AIS, TIS and Form 26AS).
• Evidence for each deduction to be given effect. This means health insurance premium receipts, specialist prescriptions for section 80DDB, and similar.

Summary

1. Fix the Act: section 194P, rule 26D and Form No. 12BBA for FY 2025-26 and earlier; section 393(1) serial number 8(iii), section 402(39), section 263(8)(b), rule 208 and Form No. 125 from tax year 2026-27.
2. Check all three conditions: resident and 75 or more; pension and interest only; and both received in the same specified bank.
3. Furnish the declaration to that bank, with evidence of every deduction to be claimed.
4. The bank computes total income after deductions and rebate, deducts tax at the rates in force, reports it in the salary statement and issues the certificate.
5. For that year, the return provision does not apply. Any other income, however small, ends the relief and brings back the ordinary duty to file.

The next guide covers Form 15H, the declaration that stops TDS on interest for a senior citizen whose tax will be nil.