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Income tax is payable if any individual earns an income in a financial year. The tax rate depends on the aggregate income which the individual has earned under the following heads –
  • Income from Salary
  • Income from House Property
  • Income from Capital Gains
  • Income from Business or Profession
  • Income from Other Sources

All the five heads of income are added together to arrive at the total income which is subject to income tax. There is a tax slab based on which tax is calculated on the income aggregating the five heads. The tax slabs are different for different tax-payers. If you are a senior citizen, your tax liability would be calculated differently because the tax slabs and the tax-saving provisions are different for senior citizens. Let’s understand how –


Who are senior citizens and super senior citizens?

For the income tax purposes Individuals who are aged 60 years and above but below 80 years are called senior citizens. Further, Individuals who are aged 80 years and above are called super senior citizens.

Sources of income for senior citizens and super senior citizens

Senior citizens and super senior citizens usually earn incomes from the following sources –
  • Pension
  • Interest on savings account or fixed deposit schemes
  • Rental income from renting out a house property
  • Income from Capital Gains
  • Senior citizen saving schemes
  • Reverse mortgage schemes
  • Post office deposit schemes which also pay an interest
  • And many others

Tax slabs for senior citizens and super senior citizens

The tax slabs for senior citizens and super senior citizens are different than the tax slabs for normal individuals as the tax exemption limits are higher for senior citizens and super senior citizens. Here are the applicable slabs for

 
FY 2019-20; AY 2020-21 –
 

For senior citizens aged 60 years or more but below 80 years

Income level Applicable tax
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

For super senior citizens

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

Moreover, under Section 87A of the Income Tax Act, if the income of the senior citizen is up to INR 5 lakhs, a full tax rebate of INR 12,500 would be applicable on the tax liability from FY 2019-20; AY 2020-21.
This means that for individuals earning incomes of up to INR 5 lakhs in a financial year, no tax amount would be payable.

 
FY 2020-21; AY 2021-22 –
 

Budget 2020 introduced an optional slab rate system for the taxpayers. As per the new tax regime the senior citizens or super senior citizens can either opt for option 1 or 2 as under:

  • OPTION 1: The slab rates under this option will be exactly the same as those mentioned above for FY 2019-20 (AY 2020-21)
  • OPTION 2: New slab rates have been introduced at reduced rates under this option
New Tax Slab from FY 2020-21 Tax Rate under the optional tax regime Existing Tax Rate (for senior citizens) Existing Tax Rate (for super senior citizens)
Upto Rs 2.5 Lakhs Exempt Exempt Exempt
Above Rs 2.5- Rs 3 Lakhs 5% Exempt Exempt
Above Rs 3- Rs 5 Lakhs 5% 5% Exempt
Above Rs 5- Rs 7.5 Lakhs 10% 20% 20%
Above Rs 7.5 -Rs 10 Lakhs 15% 20% 20%
Above Rs 10 - Rs 12.5 Lakhs 20% 30% 30%
Above Rs 12.5 - Rs 15 Lakhs 25% 30% 30%
Above Rs 15 Lakhs 30% 30% 30%

Note:
If the senior or super senior citizens opt the new tax regime specified under option 2 then they have to :


Calculation of tax for senior citizens

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 2019-2020 (AY 2020-21) and optional for FY 2020-21 (AY 2021-22) there are various deductions and exemptions which are available to senior citizens to lower their tax liability. These deductions and exemptions include the following –


Deduction under Section 80C

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 –

  • 5 year ixed deposits
  • Investment in Equity Linked Savings Scheme (ELSS)
  • Investment in Public Provident Fund (PPF)
  • Life insurance premiums (LIP)paid
  • Investment in Senior Citizen Saving Scheme (SCSS) or
  • National Saving Certificates etc.

Deduction under Section 80CCC

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.


Deduction under Section 80CCD(1B)

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.


Deduction under Section 80D

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.


Deduction under Section 80DD

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


Deduction under Section 80DDB

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.


Deduction under Section 80G

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.


Deduction under Section 80GGC

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.


Deduction under Section 80RRB

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 –

  • He or she should be an Indian resident
  • He or she should have registered the patent on or after 1st April 2003 under the Patents Act 1970
  • To claim the deduction the senior citizen or super senior citizen would have to submit a certificate(Form-10CCE) to the tax authorities and the certificate should be signed by the prescribed authorities
  • The senior citizen or super senior citizen should be the patentee

Deduction under Section 80TTB

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.


Deduction under Section 80U

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.

Filing of income tax for senior citizens and super senior citizens

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, the tax return should be filed for claiming 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 –

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 

Frequently Asked Questions

Q- Are different deductions available for senior citizens and super senior citizens?

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 2020-21 if the senior citizens or super senior citizens opt for new tax regime then no deductions and exemptions will be available except 80CCD(2) and 80JJAA.


Q- Can senior citizens file their taxes online?

Yes, the online facility of tax filing is available for senior citizens too.


Q- If the taxable income of senior citizens is below the exemption limit, is tax filing necessary?

Yes, tax filing is necessary if the senior citizen earns an income in a financial year and if TDS has been deducted on any income of the senior citizen, through tax filing, the tax payer can avail a refund of such TDS.


Q- Which income is considered for rebate, taxable income or total income?

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, full tax rebate would be allowed and the senior citizen would have to pay no tax on his income from the FY 2019-20.


Q- Is 80c applicable for senior citizens?

FAns: Yes. Deduction u/s 80C is applicable on senior citizens as per the existing tax slabs but the same will not be available under the new tax regime,which has been left at the option of taxpayer.


Q- What are the schemes for saving income tax for senior citizens ?

Ans: Following options are available to senior citizens for saving income tax.

  • Investment in senior citizen saving scheme u/s 80C upto Rs. 1,50,000/-
  • Deduction u/s 80TTB for interest income on deposits u/s 80TTB upto Rs.50,000/-
  • Deduction u/s 80D of Rs 50000
  • Deduction u/s 80DDB of Rs 100000
  • The benefit of above schemes cannot be claimed by the taxpayer under the optional tax slabs announced via Budget 2020 under the new tax regime.

Q- Does super senior citizen of 83 years have to file income tax return if his income is less than 5 lakh without deducting any rebate?

Ans: No, Assesse do not required to file an income tax return because his income is less than the basic exemption limit for the FY 2019-20. No payments in this case would be required the assessee for FY 2020-21 if he opts for the old scheme, in case a new tax regime is chosen then 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.


Q- What is the income of a senior citizen if he pays 1.5 lakh income tax?

Ans: Total Income of Assessee for FY 2019-20 or under the existing tax system for FY 2020-21 opted by the assessee is Rs 1114102.56


Q- Is a businessman above 60 years of age not counted as a senior citizen in the income tax system? Is it just for people with jobs?

Ans: No. He is eligible to count as a senior citizen.


Q- My father is a senior citizen and mother is not, what is the maximum amount I can claim for their insurance under parental medical insurance tax exemption?

Ans: Maximum deduction assessee can claim is Rs 50000 u/s 80D. The benefit will be available for the FY 2019-20 and will continue for FY 2020-21 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 medical insurance policy can be claimed.


Q- If my parents are dependent on me, can I claim a tax exemption on the expenses incurred for medical treatment?

Ans: 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/-


Q- What would be a salary of senior citizen after deductions like PPF and NPS if he is paying 5 lakhs as tax?

Ans: Net taxable salary will be Rs 2235900 on which tax payable will be Rs. 5lakh


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CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.