Notable benefits are being introduced for senior citizens in the upcoming financial year. From April 2026, new income tax provisions will simplify compliance for individuals aged 75 years and above, making the filing process easier and more accessible for eligible taxpayers.
Furnishing Form No. 125 enables eligible individuals to avoid filing an income tax return, as designated banks will compute and deduct taxes on their behalf, subject to specified conditions. This initiative is designed to ease the compliance burden for retirees with limited sources of income.
Form No. 125 is a declaration submitted by specified senior citizens under Section 393(1) of the Income Tax Act, 2025. It applies to pension and interest income received or expected to be received from a designated bank. Based on this declaration, the bank computes the tax liability and deducts tax at source (TDS). It is important to note that this facility is limited to pension and interest income and does not extend to other sources such as rent, commission, or capital gains.
Who Qualifies as a Specified Senior Citizen?
A specified senior citizen is defined as an individual aged 75 years or above. To qualify, their income must be limited to pension and interest, both of which should be received or receivable through a designated bank, as specified under Section 402(39).
Understand the Purpose of Filing Form No. 125
Form No. 125 plays a key role in the described relief to specified senior citizens by exempting them from the requirement of filing an Income Tax Return (ITR). Once the form is submitted to the designated bank, the bank assumes responsibility for computing the individual’s total income and deducting the applicable tax on their behalf.
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Who Should Form No. 125 Be Submitted To?
Form No. 125 needs to be submitted to the designated bank where the account used for receiving or expecting pension and interest income is maintained. This ensures proper processing and management of these funds.
Is Submitting Form No. 125 Mandatory?
Yes, submission of Form No. 125 is essential for certain senior citizens seeking an exemption from filing an Income Tax Return (ITR). This requirement is outlined in the provisions of Section 263(8)(b).
What Is the Deadline for Submitting Form No. 125?
Form No. 125 must be furnished once every financial year to claim exemption from filing an Income Tax Return (ITR).
Can Form No. 125 Be Filed Online?
Yes, Form No. 125 can be submitted either in physical form or electronically through the net banking facilities provided by the designated bank.
Can Form No. 125 Be Revised or Withdrawn After Submission?
Yes, in case of any change in income or other particulars, a fresh declaration must be submitted. If the senior citizen subsequently earns income other than pension and interest, the declaration must be withdrawn or revised. Upon withdrawal, the individual will be required to file an Income Tax Return (ITR).
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Is TDS Deducted After Submitting Form No. 125?
Yes, the designated bank will compute the total income and deduct tax at source (TDS) after allowing applicable deductions and rebates. Therefore, submitting Form No. 125 provides exemption only from filing an Income Tax Return (ITR) and does not exempt the individual from TDS.