Income Tax for Senior Citizens
Senior citizen is the individual Indian resident who is 60 years or above but less than 80 years old. For doing Income Tax calculation of senior citizens, the age of an individual is calculated from April 01 of the financial year. Tax calculation of Senior citizens is done keeping in mind factors such as the design of their salary structure and the pension amount given to them. In many cases, a senior citizen is being offered some additional benefits which include senior citizen concession, senior citizen discounts, and subsidized cost structure.
An important thing to note here is the way how the tax structure is designed for senior citizens and how their salary and tax is being computed.
Income Tax slab for Senior Citizens for the term for the Financial year 2020-21
New Tax Regime
Budget 2020 has given an option to choose between the existing income tax regime and a new regime for the coming financial year 2020-21.
The new tax regime offers lower tax rates and new tax slabs and simultaneously removes tax exemptions and will result in lower tax outgo for the taxpayer, according to the finance minister.
Total Income (Rs) | Simplified, optional Tax rate |
Up to Rs 2.5 Lakh | NIL |
From 250,001- Rs 500,000 | 5% |
Rs 500,001- Rs 750,000 | 10% |
From Rs 750,001- Rs 10,00,000 | 15% |
Rs 10,00,001 – Rs 12,50,000 | 20% |
Rs 12, 50,001 – Rs 1500,000 | 25% |
Above Rs 1500,000 | 30% |
Existing Tax Regime
| Income Threshold |
Tax rate applicable |
| Up to3,00,000 |
NIL |
| Abov3,00,000 to 5,00,000 |
5% on amount exceeding Rs 3 Lakh (Maximum 10,000) |
| 5,00,001 to 10,00, 00 |
20% on income exceeding Rs. 5 lakhs (max. Rs. 1 lakh) + Rs. 10,000 |
| Above 10, 00, 000 |
30% on income exceeding Rs. 10 lakhs + Rs. 1 lakh + Rs. 10,000 |
Apart from the Income Tax, Senior Citizen is also liable to pay education Cess and other Higher education Cess as an addition to the Income Tax. Information about the same is mentioned below:
| Annual Income Slabs |
Education Cess |
Secondary and Higher Education Cess |
| Below 3 lakhs |
NIL |
NIL |
| Above 3 Lakhs but less than 5 Lakhs |
2% of Income Tax Paid |
1% of Income Tax Paid |
| Above 5 Lakhs but less than 10 Lakhs |
2% of Income Tax Paid |
1% of Income Tax Paid |
| Above 10 Lakhs |
2% of Income Tax Paid |
1% of Income Tax Paid |
How to do calculation of Income Tax for Senior Citizens
Income Tax calculation is done as per the rates mentioned in the above table. Along with the applicable deductions, Income Tax calculation also takes into consideration a factor i.e. income from any house property. In this senior citizen enjoys an advantage of Rs 50,000 in comparison to non-senior Citizen. As a non-senior citizen gets a limit up to 2.5 Lakh.
What all factors need to keep in mind to calculate the Income Tax for Senior Citizens?
- One should have a clear picture of all major components in the salary of senior citizens.
- You should have exact information about basic salary, fixed allowances, house rent, special allowance, variable pay, medical components, and other taxable components.
- Information about tax saving schemes for which senior citizens enrolled himself or herself.
There are many websites which are offering tax calculators for the ease of senior citizens to calculate the gross salary and Net Income of salaried individual. As an input, you need to mention major parts of the salary along with the mentioning of information about exempted elements. There are tools available on the website that provide you the approximate value of Net Income. Apart from this, an excel tool is also available on some websites, by downloading that one can easily calculate tax for senior citizens.
Details regarding Exemptions of Senior Citizen if you go with existing tax regime
Senior Citizen gets a free limit of Rs 3 Lakh, Senior Citizen also enjoy benefits under Section 80C, Section 80 D and Section 80 DDB. Senior citizen gets an additional Tax Exemption on amount of Rs 30,000 for health insurance. Apart from this, one can also avail benefits on an amount between 60,000 to 80,000 for medical treatment.
- No Senior Citizen is required to pay service tax on the premium amount. Apart from that any gift objects, if they are giving to others also get tax exemption.
- If the limit of 15% is not altered in the context of Short-Term Capital Gains, then Senior Citizen gets an exemption from tax on short term capital gains.
- As per provision of Section 80 L, senior citizen can avail an exemption up to Rs 12000 Per annum.
- Senior Citizens also get an exemption in paying advance tax, in case no income is being generated from their businesses. In that case, they are only liable to pay self-assessment tax on an amount equivalent to their total income.
- Tax exemption on earned interest.
- In addition to this, senior citizens are not required to pay taxes on the amount that they receive on the Reversed Mortgage Scheme. This is opposite to Home loan scheme. In this scheme, regular payments are received by senior citizens during a lifetime by mortgaging their own house while still occupying the house themselves. In this case, ownership is retained by a senior citizen.
- They can submit form 15H for non-deduction of TDS on the interest accrued on Fixed Deposit. This is only applicable if the senior citizen falls in zero tax bracket and thus is automatically exempted from tax formalities.
Filing of Income Tax Return for Senior Citizen
Like every normal Indian citizen, filing of Income Tax return is also mandatory for all the salaried Senior Citizen of India. For claiming tax refund, senior citizen needs to file tax refund.
Two types of forms which senior citizen can fill as per the category under which they fall:
ITR 1
- When a senior citizen is getting a salary or pension income.
- Income earned from house or owned property.
- Income from any other sources.
ITR 2
- Salary income or pension income
- Income from house or owned property
- Short term or long-term capital gains
- Income from any other sources
- Incidents where Income from any other members of the family is combined such as that of a spouse.
- Rebate Scheme in Income Tax for senior citizens.
This scheme is applicable for all individuals where the total income is not above 5 Lakhs. Rebate is given as per section 87A.
A rebate amount of Rs 2000 is applicable for individuals who have an annual income of up to Rs 5 lakhs. Thus, the total payable tax amount for an individual will be Rs 23,000.
However, for an individual whose income is more than Rs 5 lakhs, the total tax amount will be Rs 25,000 + 20% of tax.
Other advantages given to Senior Citizen
- Extra benefits given to Senior citizens from all government nationalized banks and the private sector. Banks also offer a higher rate of interest on a savings account as compare to the rate of interest offered to the normal citizen.
- An additional 0.5% interest rate offered to banks on fixed-term deposits for senior citizens.
- Another key benefit on a fixed deposit is the way tax is deducted at source. This makes it a tax-free investment option for all senior citizens.
- For Senior Citizens, pre-mature withdrawal of fixed deposits in case of medical emergency also gets an exemption from any penalties by law under certain situations.
- In case, even if there is a fee charged for premature withdrawal of fixed deposit, the fee amount is very low as compared to the normal citizen.
