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As per Income Tax Act, 1961, senior citizen is an Indian resident whose age is 60 years or more but less than 80 years. While a super senior citizen is an Indian resident whose age is 80 years or more. This article briefly explains all the income tax provisions applicable to the resident senior citizen and super senior citizen.
Income Tax Act has categorized resident individuals into 3 parts-
Senior citizens over 60 years of age have an option to pay the tax as per the old or new tax regime. A new tax regime is introduced by the central government via Finance Act, 2020, whereby concessional tax rates are introduced which is explained in the later part of the article. However, non resident senior citizens are not eligible for the below mentioned tax slabs as the normal provisions of income tax are applicable to them.
As per old tax regime, the income tax slab rates for senior citizen for FY 2022-23 are as follows-
|Income slab (in Rs.)
|Income tax rate
|Up to Rs. 3,00,000
|3,00,001 to 5,00,000
|5% of income over Rs. 3,00,000
|5,00,001 to 10,00,000
|Rs. 10,000 + 20% of income over Rs. 5,00,000
|Rs. 1,10,000 + 30% of income over Rs. 10,00,000
Super senior citizens over 80 years of age can also avail the benefit of old and new tax regime as they have the choice to opt between the two, whichever is more beneficial.
As per old tax regime, the income tax slab rates for super senior citizen for FY 2022-23 are as follows-
|Income slab (in Rs.)
|Income tax rate
|Up to Rs. 5,00,000
|5,00,001 to 10,00,000
|20% of income over Rs. 5,00,000
|Rs. 1,00,000 + 30% of income over Rs. 10,00,000
The above calculated tax for senior and super senior citizens shall be increased by Health and Education Cess @ 4% of the income tax.
Additionally, surcharge is applicable on the basis of total income as follows:
|> Rs. 50 Lakhs
|> Rs. 1 crore
|> Rs. 2 crore
|> Rs. 5 crore
*surcharge rates has been reduced to 25% under the new tax regime for taxpayers earning more than Rs 5 crore.
Finance Act, 2020 introduced a new tax regime for the senior citizen and super senior citizen according to which concessional tax is to be paid by them. However, they have to forgo many deductions and exemptions available to them.
The income tax slab rate as per new regime is:
|Income slab (in Rs.)
|Income tax rate
|Up to Rs. 2,50,000
|2,50,001 to 5,00,000
|5,00,001 to 7,50,000
|7,50,001 to 10,00,000
|10,00,001 to 12,50,000
|12,50,001 to 15,00,000
The health and education cess as well as surcharge remains the same.
Senior and super senior citizens usually earn income from the following sources :
Senior and super senior citizens are eligible to avail numerous tax benefits as offered by Income Tax Act, 1961 as are described below:
Senior citizens are required to pay tax over the income of Rs. 3,00,000 while this limit is Rs. 5,00,000 for super senior citizens. This benefit is not available for the ordinary individuals as the limit is Rs. 2,50,000 for them.
If they are earning salary or pension income, they can claim a deduction of Rs. 50,000 from such income.
In case of senior citizens, if taxable income is up to Rs. 5,00,000, then they can claim rebate from tax i.e. they are not required to pay any tax.
Senior citizens can claim deduction up to Rs. 50,000 for medical insurance premium under Section 80D instead of Rs. 25,000 which is available to other individuals on a condition that it is paid through online banking channels.
They can claim a flat deduction of Rs. 1,00,000 in respect of medical expenses incurred for specified diseases of self or dependent senior citizen relatives as specified in the Act under Section 80DDB.
Senior citizens taxpayers can claim a total deduction up to Rs. 50,000 in respect of interest earned from savings bank accounts, bank deposits, post office deposits or cooperative banks under Section 80TTB. While people below 60 years of age can claim deduction only up to Rs 10,000 on interest earned in savings bank account.
Senior citizens are not required to pay advance tax if they do not earn any income from business or profession. Therefore, no interest is levied on late payment of advance tax.
Senior citizens are not required to file income tax return subject to following conditions:
If a senior citizen transfers his house under reverse mortgage scheme where he receives monthly installments, he is not required to pay any capital gains tax on such transfer of house.
Senior citizens over 60 years of age can invest in the Senior Citizens Savings Scheme and save tax by claiming deduction up to Rs. 1,50,000 under Section 80C. This scheme also ensures regular interest payouts. Recently the government has introduced an interest rate of 8% for the January to March quarter of the year 2022-23.
To calculate the tax liability of senior citizens or super senior citizens, their income from all the sources is added together. This gives the aggregate gross total income. Thereafter, under the old income tax slabs applicable for FY 2022-2023 (AY 2023-24) there are various deductions and exemptions which are available to senior citizens to lower their tax liability. These deductions and exemptions include the following
This section allows senior citizens or super senior citizens deductions of up to INR 1.5 lakhs from their gross total income for eligible investments and expenses. The list of popular investments which are covered under Section 80C include the following –
If you pay premiums towards a specified pension plan, such premiums paid would be allowed as a deduction under this section. The maximum limit is INR 1.5 lakhs together with section 80C. Further, 50,000 is allowed u/s 80CCD(1B) and further deduction u/s 80CCD(2) is separately allowed in respect of contributions made by the employer subject to the limit of 10% of Salary, in case of government employee the limit is 14% of salary income. The tax benefit u/s 80CC(2) is available under the new tax regime proposed in Budget 2020.
Under this section, investments done towards the National Pension Scheme are allowed as a deduction up to a maximum of INR 50,000. This deduction is over and above the total deduction available under Section 80C and Section 80CCC. NPS account can be opened at the age of less than 65 years.
Health insurance premiums paid for availing health insurance coverage for senior citizens or super senior citizens is allowed as a deduction under this section up to a maximum of INR 50,000. Also, tax benefit in respect of expenses incurred for preventive health checkup amounting maximum upto Rs 5000 can be availed under the same section.
In case no medical policies have been taken for senior citizens then too the medical expenditures incurred for them (in payment mode other than cash) can be claimed as a deduction under section 80D.
If the resident senior citizen or super senior citizen incurs expenses for the treatment or maintenance of a disabled dependent as may be prescribed, deduction can be claimed under this section for such expenses. The limit of deduction allowed is fixed and depends on the disability suffered. If the disability suffered is 40% or more but below 80%, a fixed deduction of INR 75,000 is allowed. For severe disabilities (80% or more) , the deduction limit increases to INR 1,25,000 lakhs
Expenses incurred for treating specific illnesses are covered under section 80DDB. If resident senior citizens or super senior citizens or their dependents suffer from pre-specified diseases, they can claim a deduction of expenses incurred on treating such diseases. From FY 2018-19 the limit of deduction would be the actual costs incurred up to a maximum of INR 1 lakh.
IIf senior citizens or super senior citizens donate to specified charitable causes and institutions, they can claim a deduction for the donation made. Deduction is allowed either at 50% of the donated amount or 100% of the donated amount depending on the charity chosen.
If senior citizens or super senior citizens contribute money to a political party or an electoral trust, the contribution would be allowed as a deduction under Section 80GGC. Donation in cash is not allowed as deduction.
If a resident senior citizen or super senior citizen has a registered patent and earns royalty incomes on such patents, the royalty received is allowed as a deduction from taxable income. The maximum amount of royalty which would be allowed as a deduction would be limited to INR 3 lakhs. Moreover, to claim the deduction, the following conditions should be fulfilled by the senior citizen or super senior citizen –
If the resident senior citizen or super senior citizen has made deposits in a bank or post office, the interest earned on such deposits, including interest from savings account, fixed deposit schemes and post office deposit schemes would be allowed as a deduction in the hands of the senior citizen. Deduction on interest income earned would be limited to INR 50,000 from FY 2018-19.
The deduction under Section 80U is available to resident senior citizens or super senior citizens who suffer from a disability or mental retardation. This deduction amount is fixed at INR 75,000 which increases to INR 1.25 lakhs if the senior citizen or super senior citizen has severe disabilities.
Besides the various deductions available under Chapter VI A of the Income Tax Act, the amount received as a loan by senior citizens or super senior citizens on reverse mortgage scheme is not taxable. Under the scheme of reverse mortgage, the senior citizen or super senior citizen can avail EMIs for the value of a property belonging to him/her by mortgaging the property. The EMI payments continue throughout the lifetime of the senior citizen or super senior citizen and provide a source of regular inflow. When the senior citizen or super senior citizen dies, the house property is sold to realise the loan.
Moreover, resident senior citizens and super senior citizens are also not required to pay any advance tax on their incomes if they are not having income from business or profession. They file their returns through self-assessment tax after the completion of the financial year. After the income is aggregated and the eligible deductions are deducted from the income, the taxable income of the individual is ascertained. This taxable income is, then, subject to tax as per the applicable tax slab.
You can use the Income Tax Calculator to calculate your taxes.
Filing an income tax return is an important way to declare your total income and contribute to the nation's development. It helps the government fund infrastructure and essential services such as healthcare and defense. Meeting all tax obligations before the due date is crucial to avoid penalties and legal consequences. Additionally, filing an income tax return holds significant legal value as it is an official record with the government.
Yes, senior citizens have to mandatorily file income tax return. However, senior citizens over 75 years of age, whose income consists of only pension and interest income from the same bank are exempted from filing income tax return.
Senior citizens have to file ITR-1 if their income consists of salary or pension, rent from residential property, or income from other sources such as interest. However, if their income includes salary or pension, rent from residential property, income from sale of capital assets such as shares or property or income from other sources, then, they have to file ITR-2.
Super senior citizens over 80 years of age have an option to submit ITR-1 or ITR-4 through offline mode.
Yes, senior citizens can claim a standard deduction of Rs. 50,000 from pension or salary income.
Yes, the interest earned on Senior Citizen Savings Scheme is eligible for deduction up to Rs. 50,000 under Section 80TTB.
Senior citizens can claim a deduction of Rs. 50,000 on interest received on fixed deposit under Section 80TTB.
Non resident senior citizens over 60 years of age cannot avail the benefits available to resident senior citizens. Therefore, tax slab applicable to normal individuals below 60 years of age is applicable to NRI senior citizens. They have to pay tax if their income exceeds Rs. 2,50,000.
No, NRI senior citizens are not eligible to claim the rebate under Section 87A. Therefore, they have to pay tax if their income is exceeding Rs. 2,50,000.
Tax slab rates are not applicable in case of capital gains, therefore, in case of listed equity shares if shares are sold within a year, 15% tax rate is applicable under Section 111A and if shares are sold after 1 year, 10% tax rate is applicable under Section 112. On the other hand, in case of sale of unlisted shares, tax is to be paid as per the prescribed slab rates if shares are sold within 2 years and tax rate is 20% in case shares are sold after a period of 2 years.
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