Senior Citizen Income Tax Calculation – FY 2025–26

# Senior Citizen Income Tax Calculation – FY 2025–26  

(New Tax Regime | AY 2026–27 Onwards)

Understanding income tax under the New Tax Regime is essential for senior citizens receiving pension income. Below is a complete step-by-step example showing how the final tax liability can become zero.

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1. New Tax Regime Slab Rates (AY 2026–27 onwards)

Up to ₹4,00,000                – Nil

₹4,00,001 – ₹8,00,000          – 5%

₹8,00,001 – ₹12,00,000         – 10%

₹12,00,001 – ₹16,00,000        – 15%

₹16,00,001 – ₹20,00,000        – 20%

₹20,00,001 – ₹24,00,000        – 25%

Above ₹24,00,000               – 30%

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2. Step 1: Compute Total Income

Example:

Gross Pension Income:          ₹11,50,000

Less: Standard Deduction:      ₹75,000

Total Taxable Income:          ₹10,75,000

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3. Step 2: Slab-wise Tax Calculation

Income up to ₹4,00,000         – Nil

₹4,00,000 × 5%                 = ₹20,000

₹2,75,000 × 10%                = ₹27,500

Total Tax Before Rebate        = ₹47,500

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4. Step 3: Apply Rebate (Section 87A)

Rebate under Section 87A       = ₹47,500

Final Tax Payable              = ₹0

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Key Insight:

Even though the taxable income is ₹10,75,000, correct slab calculation and rebate benefits can reduce the final tax liability to zero (subject to applicable rebate limits under the New Tax Regime).

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Final Takeaway:

✔ Always calculate tax slab-wise  

✔ Check eligibility for Standard Deduction  

✔ Verify Section 87A rebate applicability  

✔ Plan properly before assuming tax liability  

Proper tax planning ensures compliance and legal tax optimization.