About Senior Citizen Tax Slab

Last Updated: 11 Oct 2024

Our expenses and requirements vary as we become older. This means our lives enter a new stage after retirement, one in which we have less money but more free time. The government has created certain tax incentives for senior citizens in order to assist them in managing their financial load. So, let’s explore the senior citizen tax slab in detail.

The Income Tax Act divides senior residents into three categories:

• People who are younger than sixty years old
• Senior citizens are those in their 60s to 80s.
• Super senior citizens are those who come under 80 years of age or older.

Senior Citizen Tax Slab

Seniors who are 60 years of age or older can choose to pay their taxes under the old and new tax system. Through the Finance Act of 2020, the central government established a new tax system that includes concessional tax rates, which are discussed in more detail in the article’s subsequent sections. However, senior persons who do not reside in the country are not qualified for the tax slabs listed below because they are subject to regular income tax laws.

The tax on income slab rates for older citizens in FY 2022–2023, according to the previous tax regime, are as follows:

Income slab (in Rs.)	Income tax rate
Up to Rs. 3,00,000	Nil
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
Above 10,00,000	Rs. 1,10,000 + 30% of income over Rs. 10,00,000

Income Tax Slab For Super Senior Citizen

Super elderly persons who are 80 years of age or older can choose to benefit from both the old and new tax regimes, depending on which one is more advantageous.

The income tax slab for senior citizens for super senior citizens for FY 2022–2023 are as follows, per the previous tax regime:

Income slab (in Rs.)	Income tax rate
Up to Rs. 5,00,000	Nil
5,00,001 to 10,00,000	20% of income over Rs. 5,00,000
Above 10,00,000	Rs. 1,00,000 + 30% of income over Rs. 10,00,000

Benefits for Income Tax Slab for Senior Citizens above 60 years

The following is a list of some of the advantages that senior individuals are eligible for under the provisions of the Income Tax Act:

• Deductions are allowed under the Income Tax Act’s Section 80C.
• Advantages offered by the reverse mortgage program.
• If taxes are paid in advance, there are exemptions available.
• Banks provide higher interest rates.
• Higher deductions apply to specific medical treatments.
• Increased deductions are offered for health insurance.
• Section 87A tax deductions.
• Standard deductions.
• The income exemption threshold is increased.

How to Calculate Senior Citizen Tax Slab For Pensioners FY 2024-25 Done?

Seniors have higher exemption limitations under the existing tax system than anyone under 60. But the most recent tax law, which takes effect in the fiscal year 2024–2025—does not provide any more age-based exemptions.

A senior citizen’s income tax is determined by taking into account all of their income sources, including their base pay, housing allowance, other allowances, and permissible deductions. The taxable income is then ascertained by consulting the income tax slab for the respective fiscal year. It’s critical to recognize that the tax regime has altered and that you are familiar with the new regulations.

Other Important Details Regarding Income Tax for Senior Citizens

• A Standard Deduction of ₹50,000 is included in the income tax slab for senior and super senior persons in the event that the pension income is the major source of income and is charged under the head salary.
• A ₹50,000 exemption from income tax is included in the computation for older people’s interest generated on fixed deposits.
• If senior persons pay their health insurance premiums, they are eligible for a tax deduction under Section 80D of up to ₹50,000.
• Seniors can deduct more from their medical costs for certain conditions under Section 80DDB.
• In addition, senior individuals can deduct a maximum of ₹1,00,000 for treatment of serious illnesses under Section 80DDB.
• Income from a reverse mortgage is also not included in the income tax computation for senior adults.

Filing Income Tax for Senior Citizens

Senior citizens can use the following forms for tax-filing purposes

ITR-1:

• Suitable for salary/pension income
• Accommodations such as a home/dwelling should also be included in your payroll.
• This includes income from such sources as commission rate.
• Not only will this cost be carried forward to the next year, but the earlier loss will also not double count the business income tax.
• Leaves out both tokens from races and lottery freak-outs.

ITR-2

• Pay or pension
• Revenue from a home or other property
• Capital gains
• Revenue from additional sources (such as lottery and horse racing winnings)
• Events in which the individual’s income must be merged with that of another person, such as a spouse or other family member

ITR-4

• Ideal for elderly individuals who make over ₹2 crores from their business
• Adequate for use as business income in accordance with Sections 44AD and 44AE.
• Appropriate for professional income as determined under Section 44ADA.
• Includes a maximum of ₹50 Lakh in salary or pension income.
• Includes earnings from residential real estate
• Includes earnings from additional sources (not including winnings from lotteries and horse racing).

Senior Citizens Tax Exemptions

• Health insurance: Under Section 80D, senior persons may deduct up to Rs. 50,000 from their annual premiums for health insurance and medical costs. For critical conditions previously listed, dependent seniors may be eligible for a deduction of up to Rs. 1 lakh. Under Section 80DDB, this is appropriate.
• Pension: An annual deduction of Rs. 50,000 is standard for pensions. Annuity payments, which are used as pensions and are subject to taxes in the same way as salary, fall under this category. Item 80D applies to this.
• Income from Interest on Deposits: Section 80TTB allows for the annual deduction of interest income up to Rs. 50,000.

Comparison Between New Regime & Old Regime

The comparison between the new tax regime for the financial year 2023-24 and the old regime highlights several key differences in tax rates and income slabs. Under the new regime, the tax rates are lower across various income brackets compared to the old regime. For instance, in the ₹5,00,000 – ₹6,00,000 income bracket, the tax rate is 10% in the new regime, whereas it was 20% in the old regime.

This pattern continues throughout the income slabs, with the highest tax rate of 30% applying to incomes above ₹15,00,000 in both regimes. Overall, the new regime offers lower tax rates and aims to simplify the tax structure by reducing the number of deductions and exemptions. However, taxpayers must evaluate their individual financial situations to determine which regime is more beneficial for them in terms of tax savings and compliance.

The Bottom Line

Senior citizens 60 years of age and more who struggle financially in retirement can get much-needed help from the senior citizen tax slab. To lessen their tax burden, senior persons should be aware of and utilize the benefits provided by this slab.

Frequently Asked Questions

Is there any difference between the tax slabs for senior citizens and super senior citizens?

Yes, super senior citizens (80 years or above) have a higher exemption limit than regular senior citizens (60-80 years)

Are all senior citizens eligible for tax benefits under this slab?

No, only those senior citizens with taxable income are eligible for tax benefits under this slab.

Can a senior citizen claim deductions under different sections of the Income Tax Act?

A senior citizen can claim deductions under different sections, such as 80C, 80D, and 80TTB, in addition to the tax benefits offered under this slab.

Can a senior citizen claim benefits from this slab if they have income from more than one source?

Yes, as long as their combined taxable income is below the exemption limit, a senior citizen can avail of benefits from this slab.