Pension Taxable? Why 60+ Must File ITR 2026

Many retired Indians think pension means no tax filing. Wrong. Pension is treated as salary income by the IT department. If your total income crosses the basic exemption limit, you must file ITR — or face fines and blocked refunds.

Here's what happened: Pension income is classified as 'income from salary' under the Income Tax Act — it is fully taxable and not exempt by default.. For FY 2025-26 (AY 2026-27), the basic exemption limit under the new tax regime is ₹3 lakh for all taxpayers, including senior citizens.. Senior citizens aged 60-79 get a higher ₹3 lakh basic limit under old regime; those above 80 years get ₹5 lakh — but only if they opt for the old regime..

What you should do: Calculate your total annual pension income including arrears, family pension, and any interest from FDs or savings accounts before assuming you are exempt.. Choose your tax regime carefully — the old regime offers senior citizen-specific deductions like 80D (₹50,000 for health insurance) and 80TTB (₹50,000 on interest income).. File ITR-1 (Sahaj) if your pension plus other income is below ₹50 lakh and from simple sources — the deadline for AY 2026-27 is 31 July 2026, so act now..

Family pension received by a spouse after a pensioner's death is taxed under 'income from other sources' — a standard deduction of ₹15,000 or one-third of pension (whichever is lower) is still claimable.