Income Tax Calculation for Senior Citizens FY 2023-24

Priya , Last updated: 23 April 2024

Introduction

There are several benefits in the Income Tax Act available for senior and super senior citizens to claim to reduce their tax burden.

Let's see who are senior and super senior citizens as per the Income Tax Act.

• Senior Citizens: Individuals who are 60 or above but below 80 years old.
• Super Senior Citizens: Individuals who are aged 80 and above.

The age of an individual is to be checked on the last day of the Financial Year. Therefore, if you turn 60 in FY 2023-24, you shall be a Senior citizen for the AY 2024-25. The same goes for turning 80 in this financial year.

In a nutshell,

• Senior Citizens from AY 2024-25 onwards - with birthdays from April 1963 to March 1964.
• Super Senior Citizens from AY 2024-25 onwards - those with birthdays from April 1943 to March 1944.

Benefits Available

Some of the benefits that can be enjoyed by Senior and Super Senior Citizens in the Income Tax Act are:

• Higher Basic Exemption Limits: The Slab rates for Senior and Super Senior citizens are higher.

Slab Rates for Senior Citizens (age 60 and above but below 80 years)

 Net Income Rate of tax Tax Amount Up to Rs 3,00,000 Nil 0 Rs 3,00,000 to Rs 5,00,000 5% Rs 10,000 Rs 5,00,000 to Rs 10,00,000 20% Rs 1,00,000 + Rs 10,000 = Rs 1,10,000 Above Rs 10,00,000 30% Rs 2,60,000 assuming net income of Rs 15 lakh

In the above case, if the individual was below 60 years, their tax liability would have been Rs 2,62,500 so there is a tax saving of Rs 2,500 [or 5% of (3 lakh-2.5 lakh)].

Slab Rates for Super Senior Citizens (age 80 and above)

 Net Income Rate of tax Tax Amount Up to Rs 5,00,000 Nil 0 Rs 5,00,000 to Rs 10,00,000 20% Rs 1,00,000 Above Rs 10,00,000 30% Rs 2,50,000 assuming net income of Rs 15 lakh

In the above case, if the individual was below 60 years, their tax liability would have been Rs 2,62,500 so there is a tax saving of Rs 12,500 [or 5% of (5 lakh-2.5 lakh)].

*The Slab Rate benefit to Senior and Super Senior Citizens is only available in the Old Regime.

• Higher Section 80D Deduction on Medical Premium: A senior and super senior citizen is entitled to claim a deduction of Rs 50,000 under this section for self, spouse and dependent children, while those below 60 are only entitled to Rs 25,000. Moreover, if an individual has parents who are aged 60 and above, an additional Rs 50,000 can be claimed. Here are the maximum deduction limits:

For Individual and Family Coverage: (Self, Spouse and Dependent Children)

1. Individuals below 60 years: Up to Rs 25,000.
2. Individuals aged 60 years and above (senior citizens): Up to Rs 50,000.

For Policies Covering Parents (in addition to individual and family coverage):

1. Individuals below 60 years with parents below 60 years: Up to Rs 25,000.
2. Individuals below 60 years with parents aged 60 years and above (senior citizens): Up to Rs 50,000.
3. Individuals aged 60 years and above with parents: Up to Rs 1,00,000.

• Higher Deduction under Section 80DDB: Section 80DDB provides for a deduction to Individuals and HUFs for medical expenses incurred for the treatment of specified diseases or ailments. Such expense is allowed as a deduction when actually incurred on self or a dependent family member. For individuals, it is Rs 40,000. For Senior and Super Senior Citizens this limit is Rs 1,00,000.
• Section 80TTB: Is a special deduction allowed on any Interest Income earned from Deposits(savings or fixed) to the tune of Rs 50,000. This is available to Individuals who are 60 and above years old. It is designed to provide relief as many rely on interest as a source of income when they hit that age.
• Exemption from paying Advance Tax: Senior Citizens are exempt from paying advance tax as long as their income does not include any profits or gains from business or profession. In the case of Super Senior Citizens, advance tax is not required to be paid, irrespective of income including profits from business or profession.
• TDS Exemption through Form 15H: Senior and Super Senior citizens in India can avail themselves of relief from Tax Deducted at Source (TDS) by submitting Form 15H to the financial institution from which they receive income. Form 15H is a declaration under Section 197A(1C) of the Income Tax Act, requesting the financial institution not to deduct TDS if the total income for the relevant financial year is below the taxable limit.
• No Requirement for Mandatory E-Filing: Super senior citizens have the option to file their income tax returns(ITR-1:Sahaj or ITR-4:Sugam) in a physical format (paper filing) if their income is not subject to tax audit requirements.
• Exemption from filing ITR: Budget 2021 introduced Section 194P, under which senior citizens aged 75 and above are exempted from filing the ITR if they fulfil the following criteria:
1. Senior Citizens should be of age 75 years or above
2. Senior Citizens should be 'Resident' in the previous year
3. Senior Citizen has pension income and interest income only & interest income accrued/earned from the same specified bank in which he is receiving his pension
4. The senior citizen will submit a declaration to the specified bank.
5. The bank is a 'specified bank' as notified by the Central Government. Such banks will be responsible for the TDS deduction of senior citizens after considering the deductions under Chapter VI-A and rebate under 87A.
6. Once the specified bank, as mentioned above, deducts tax for senior citizens above 75 years of age, there will be no requirement to furnish income tax returns by senior citizens.
• Section 80C: specifically allows for the deduction of investment made to the Senior Citizen Savings Scheme.

New Regime

If an individual opts for the new regime, there is no special benefit in slab rates available to Senior or Super Senior Citizens. Moreover, Section 80 deductions would be unavailable.

Slab Rates under New Regime:

 Net Income Rate of tax Tax Amount Up to Rs 3,00,000 Nil Nil Rs 3,00,000 to Rs 6,00,000 5% Rs 15,000 Rs 6,00,000 to Rs 9,00,000 10% Rs 30,000+Rs 15,000 = Rs 45,000 Rs 9,00,000 to Rs 12,00,000 15% Rs 45,000+Rs 30,000+Rs 15,000 = Rs 90,000 Rs 12,00,000 to Rs 15,00,000 20% Rs 60,000+Rs 45,000+Rs 30,000+Rs 15,000 = Rs 1,50,000 More than Rs 15,00,000 30% Income exceeding Rs 15,00,000*30% + Rs 1,50,000

Income Tax for Senior Citizens Example

 Particulars Senior Citizen Super Senior Citizen New Regime (no age benefits) Pension Rs 16,00,000 Rs 16,00,000 Rs 16,00,000 Less: Standard Deduction Rs (50,000) Rs (50,000) Rs (50,000) Salary Income Rs 15,50,000 Rs 15,50,000 Rs 15,50,000 Interest Income Rs 1,00,000 Rs 1,00,000 Rs 1,00,000 Gross Income Rs 16,50,000 Rs 16,50,000 Rs 16,50,000 Less: Deductions 80C Rs (1,50,000) Rs (1,50,000) Nil 80D Rs (50,000) Rs (50,000) Nil 80TTB Rs (50,000) Rs (50,000) Nil Net Taxable Income Rs 14,00,000 Rs 14,00,000 Rs 16,50,000 Tax thereon Rs 2,30,000 Rs 2,20,000 Rs 1,95,000

Priya
(Student )
Category Income Tax   Report

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