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In India, the income tax slabs used to be structured in a progressive manner, where the tax rates increase as the income level rises. Senior citizens aged 60 years and above but below 80 years and super senior citizens aged 80 years and above are provided with certain tax benefits and concessions. However, in the Union Budget 2023, the government made the new tax regime the default tax regime. The new tax regime has the same tax slab for every taxpayer in India, which makes it the simplest ever tax regime. While seniors can still opt for the Old Tax Regime (OTR) with its progressive slabs, let’s talk about the tax provisions applicable to the resident senior citizen and super senior citizen in the old tax regime in detail.
For income tax purposes, Resident individuals who are aged 60 years and above but below 80 years in the previous year or 1st day of AY are called senior citizens.
Further, Resident individuals aged 80 years and older in the previous year or 1st day of AY are called super senior citizens.
Senior citizens and Super Senior Citizens usually earn incomes from the following sources –
The income tax calculation for senior citizens in India follows the same basic principles as for other taxpayers. However, senior citizens are eligible for certain additional tax benefits and exemptions. The income tax calculation for senior citizens is levied on all sources of income like pension, rental income, interest or earnings from savings schemes, fixed deposits, post office schemes, or reverse mortgages.
Here's an overview of the income tax calculation process for senior citizens:
Senior Citizen Pensioners are those citizens who are usually between 58 and 60 years old. A citizen becomes pensioner once they retire from a regular job. Benefits that a senior citizen pensioner can claim are:-
Under the old tax regime, the basic exemption limit for senior citizens (Resident individuals aged 60 years or above) is ₹3 lakh. This means that their income up to ₹3 lakh is exempt from income tax. On the other hand, super senior citizens (Resident individuals aged 80 years or above) are eligible for a higher basic exemption limit of ₹5 lakh. However, under the new tax regime, the basic exemption limit for both senior and super citizens is Rs. 2.5 lakh.
Additionally, the standard deduction for senior citizens is ₹50,000 under both the old and new tax regimes
Income Tax Slab Rate for Senior Citizens (FY 2023-24) (Old Regime)
| Income level | Applicable |
|---|---|
| Up to INR 300,000 | Nil |
| INR 300,001 to INR 500,000 | 5% of the income exceeding INR 300,000 |
| INR 500,001 to INR 10,00,000 | 5% of the income exceeding INR 300,000 + 20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above | 5% of the income exceeding INR 300,000 + 20% of the income exceeding INR 500,000 + 30% of the income exceeding INR 10,00,000 |
| Income level | Applicable tax |
|---|---|
| Up to INR 500,000 | Nil |
| INR 500,001 to INR 10,00,000 | 20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above | 20% of the income exceeding INR 500,000 + 30% of the income exceeding INR 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, the surcharge is applicable on the basis of total income as follows: up to 50 lakh, the surcharge rate is nil. Above Rs 50 lakh but upto 1cr 10% of Tax, above 1 Cr but upto Rs.2Cr 15% of tax, above Rs 2Crbut upto %Cr 25% of tax, Above 5 Cr 37% of tax. surcharge rates have been reduced to 25% under the new tax regime for taxpayers earning more than Rs 5 crore. Surcharge rates of 25% and 37% are not applicable in the case of STCG u\s 111A, LTCGu\s 112A, LTCG u\s 112, and Dividend income,
| Income Tax Slabs | Tax Rate |
|---|---|
| Up to Rs.3,00,000 | None |
| Rs.3,00,001 to Rs.5,00,000 | 5% |
| Rs.5,00,001 to Rs.7,50,000 | 10% |
| Rs.7,50,001 to Rs.10,00,000 | 15% |
| Rs.10,00,001 to Rs.12,50,000 | 20% |
| Rs.12,50,001 to Rs.15,00,000 | 25% |
| Above Rs.15,00,000 | 30% |
The health and education cess along with surcharge remains the same.
Following are a few of the benefits that are offered by the Income tax department to senior and super senior citizens:-
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 that are covered under Section 80C includes 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 is subject to the limit of 10% of Salary, in the case of government employees, 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 accounts 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 benefits in respect of expenses incurred for preventive health checkups amounting maximum of up to Rs 5000 can be availed under the same section.
In case no medical policies have been taken for senior citizens, then 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, 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 the deduction would be the actual costs incurred up to a maximum of INR 1 lakh, which can be deducted from tax for the medical treatment of a dependent who is aged 60 or more or is a super senior citizen over the age of 80 years or more.
If senior citizens or super senior citizens donate to specified charitable causes and institutions, they can claim a deduction for the donation made. The 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 a deduction under Section 80GGC. Donation in cash is not allowed as a deduction. The deduction is allowed for 100% of the donation
If a resident senior citizen or super senior citizen has a registered patent and earns royalty income on such patents, the royalty received is allowed as a deduction from taxable income. The maximum amount of royalty 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 accounts, 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 for normal disability, 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 a reverse mortgage scheme is not taxable. Under the scheme of a 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 realize the loan.
Moreover, resident senior citizens and super senior citizens are also not required to pay any advance tax on their incomes if they do not have income from businesses or professions. 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.
Note:
If the senior or super senior citizens opt for the new tax regime specified under option 2, then they have to:
Forego specified deductions and exemptions
Forego benefits under section 80TTB
Forego additional basic exemption limit available for senior or super senior citizens
The benefit u/s 87A will still be available
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Income tax is required to be filed by senior citizens & super senior citizens if they have any income during the financial year. Even if the income is not taxable, a tax return should be filed to claim a tax refund or for evidence of income earned during a financial year. To file an income tax return, senior citizens & super senior citizens would have to use the following income tax forms, depending on the nature of their income. There is also a section in TDs 194P that is applicable to specified senior citizens whose age is 75 years or more and who have only pension income and no other income except interest from the same specified bank in which pension income is received. Then, in that case, the specified bank will deduct the TDS, and the specified senior citizen is not required to file the return
| ITR Form | Nature of income |
|---|---|
| ITR 1 | Total income upto Rs 50 lakhs from salary, one house property, other sources or agriculture income upto Rs 5,000 |
| ITR 2 | Total Income more than 50 lakhs, or from two house property, capital gains, or agriculture income exceeding Rs 5,000 |
| ITR 3 | Income from Business or Profession |
| ITR 4 | For presumptive income |
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No, though the tax slabs are different, the same deductions are available to senior citizens and super senior citizens for the FY 2019-20. For FY 2022-23 if the senior citizens or super senior citizens opt for the new tax regime then no deductions and exemptions will be available except 80CCD(2) and 80JJAA.
Yes, the online tax filing facility is also available for senior citizens.
Yes, tax filing is necessary if the senior citizen earns an income in a financial year, and if TDS has been deducted from any income of the senior citizen, through tax filing, the taxpayer can avail of a refund of such TDS.
For the applicable rebate on tax, taxable income is considered. The deductions are deducted from the gross total income, and if the taxable income is below INR 5 lakhs, a full tax rebate would be allowed, and the senior citizen would have to pay no tax on his income
Yes. Deduction u/s 80C is applicable to senior citizens as per the existing tax slabs, but the same will not be available under the new tax regime, which has been left to the discretion of the taxpayer.
The following options are available to senior citizens for saving income tax.
No, Assesse is not required to file an income tax return because his income is less than the basic exemption limit for the FY 2022-23. No payments in this case would be required for the assessee if he opts for the old scheme, in case a new tax regime is chosen then the benefit of increased basic exemption limit in case of super senior citizens will not be available, but Rebate u/s 87A can still be claimed.
No. He is eligible to count as a senior citizen.
The maximum deduction the assessee can claim is Rs 50000 u/s 80D. The benefit will be available for FY 2019-20 and will continue for FY 2022-23 if the assessee opts for old taxation slabs. In case a new tax regime as proposed u/s115BAC is chosen then no such benefit of deduction for premium paid on a medical insurance policy can be claimed.
If parents are senior or super senior citizens, then deduction of medical expenditure on parents can be claimed as deduction u/s 80D upto Rs. 50,000/-
Net taxable salary will be Rs 2235900, on which tax payable will be Rs. 5lakh
