Income Tax Slab For Senior Citizen & Super Senior Citizen FY 2023-24 (AY 2024-25)
Updated: Aug 2
As we step towards the last date for ITR filing for FY 2023-24, that is, 31st July 2024, it is very important that senior and super senior citizens understand changes in their tax obligations for AY 2024-25.
This article shall, therefore, attempt to explain the slab rates of income tax designed for senior citizens (aged 60 to 79 years), and super senior citizens (aged above 80 years) in India. With changing economic conditions and emerging demographic scenarios, the government keeps altering its taxation laws; it is relevant to be at par with those changes. We will explore the nuances of these tax slabs, including exemptions, deductions, and tax-saving tips tailored to maximize your financial health and minimize tax liabilities.
Table of Contents
Budget 2024 Update: New Income Tax Slabs for FY 2024-25
The Budget 2024 introduced a revised new regime that has brought an enhanced tax saving of Rs. 17,500 for taxpayers with changes in the tax slabs. This includes the increase of standard deduction to Rs. 75,000 and an enhanced deduction for family pensions from Rs. 15,000 to Rs. 25,000. These changes shall be operative from the Financial Year 2024-25.
Here is the comparison of the tax slabs before and after the Budget 2024:
Tax Slab (FY 2023-24) | Tax Rate | Tax Slab (FY 2024-25) | Tax Rate |
Up to ₹3 lakh | Nil | Up to ₹3 lakh | Nil |
₹3 lakh - ₹6 lakh | 5% | ₹3 lakh - ₹7 lakh | 5% |
₹6 lakh - ₹9 lakh | 10% | ₹7 lakh - ₹10 lakh | 10% |
₹9 lakh - ₹12 lakh | 15% | ₹10 lakh - ₹12 lakh | 15% |
₹12 lakh - ₹15 lakh | 20% | ₹12 lakh - ₹15 lakh | 20% |
More than ₹15 lakh | 30% | More than ₹15 lakh | 30% |
Age-Specific Tax Rules
The Income Tax Act, 1961, has defined "senior citizens" to mean those residents in India who are of the age bracket 60 - 79 years and "super senior citizens" to mean those above the age of 80 years. This article outlines the different tax obligations for these groups, categorized as follows:
Persons below 60 years of age,
Seniors age 60-79 years.
Above 80 years: super senior citizens
Sources of income of senior and super senior citizens usually include pension, rental income, interest from savings and fixed deposits, earnings from senior citizen savings scheme, capital gains, reverse mortgage, and interest from post office deposits. This article tries to make the complicated tax provisions concerning these sources of income easy for the resident senior and super senior citizens.
Income Tax Slabs for Senior & Super-Senior Citizens
According to the Income Tax Act of 1961, taxpayers who are over 60 but under 80 are deemed senior citizens, and taxpayers who are above 80 are deemed super senior citizens. Different tax rates applied to different groups of people under the previous tax system. This lessens the tax burden on individuals without a steady source of income. The tax rates for senior and super-senior citizens under the previous tax scheme are listed below.
Senior Citizens
Super Senior Citizens
Income Tax Slabs For Senior & Super Senior Citizens under New Tax Regime
There is no distinction in tax rates for various groups of people under the new tax system. Stated differently, taxpayer rates for senior and super-senior persons will be the same as those for those under the age of 65. The following are the senior citizen and senior super citizen slab rates under the new tax regime:
Surcharge Applicable under New Tax Regime
The proposed tax regime aims to lower the surcharge for senior citizens who earn more than 5 crore in taxable income. The 37% to 25% penalty on revenue beyond 5 crore has been lowered. The surcharge rates under the new tax scheme are as follows:
Calculation of Tax Liability of Senior & Super Senior Citizens
Seniors and super senior citizens' total income from all sources is summed to determine their tax obligation. This provides the overall gross income. After that, older individuals can reduce their tax due by taking advantage of several deductions and exemptions under the previous income tax slabs that will be in effect for FY 2022–2023 (AY 2023–2024). The following are some of these exclusions and deductions:
Section 80C
Under this section, appropriate investments and costs may be deducted by senior people or super senior citizens up to Rs. 1.5 lakhs from their gross total income. Among the well-known assets that fall under Section 80C are the following:
Fixed deposits for five years
Making an Equity Linked Savings Plan (ELSS) investment
Public Provident Fund (PPF) investment
Payment of life insurance premiums (LIP)
National Savings Certificates
Section 80CCC
You may deduct premium payments made under this section if you are contributing to a designated pension plan. The combined ceiling of Rs. 1.5 lakhs and section 80C is the limit. Additionally, 50,000 is permitted under Section 80CCD(1B), and an additional deduction under Section 80CCD(2) is permitted for employer contributions, up to a maximum of 10% of pay; for government employees, the maximum is 14% of salary income. Under the new tax structure outlined in Budget 2020, there is a tax benefit under Section 80CC(2).
Section 80CCD(1B)
Investments made towards the National Pension Scheme are deductible under this provision up to a cap of INR 50,000. This deduction exceeds the entire allowable deduction under Sections 80CCC and 80C. A non-profit savings account (NPS) can be opened by anyone under 65.
Section 80D
Under this section, a deduction of up to Rs. 50,000 for health insurance premiums paid to obtain coverage for senior people or super senior citizens is permitted. Additionally, under the same clause, tax benefits are available for costs expended for preventive health checkups up to a maximum of Rs 5000. Senior citizens' medical expenses (paid for with a method other than cash) may also be deducted under section 80D if no medical plans have been taken out for them.
Section 80DD
This section allows the resident senior citizen or super senior citizen to claim a deduction for costs incurred in treating or maintaining a disabled dependent, if applicable. The maximum amount that can be deducted is set and is determined by the degree of disability. In cases where the disability is 40% or more but less than 80%, a fixed deduction of Rs. 75,000 is permitted. With 80% or more severe disability, the deduction cap rises to Rs. 1,25,000 lakhs.
Section 80DDB
Section 80DDB provides coverage for medical expenses related to the treatment of certain diseases. Residents who are senior citizens, super seniors, or their dependents who have certain disorders can deduct the costs of treating certain conditions from their income. Starting in FY 2018–19, the deduction cap would be Rs. 1 lakh, or the actual costs spent.
Section 80G
Seniors and super seniors may deduct their donations from their taxes if they make gifts to designated charities and organisations. Depending on the charity selected, a deduction of either 50% or 100% of the donation amount is permitted.
Section 80GGC
Contributions made by super senior citizens or senior citizens to political parties or electoral trusts qualify for a deduction under Section 80GGC. Cash donations are not eligible for a deduction.
Section 80RRB
A resident senior citizen or super senior citizen may deduct the royalty they receive from their taxable income if they have a registered patent and receive royalties from it. The highest royalty deduction that could be made would be restricted to Rs. 3 lakhs. Furthermore, for the senior citizen or super senior citizen to be eligible for the deduction, they must meet the following requirements:
The person must reside in India.
In accordance with the Patents Act of 1970, he or she was required to register the invention on or after April 1, 2003.
The senior citizen or super senior citizen must submit a certificate (Form-10CCE) to the tax authorities to claim the deduction, and the certificate must be signed by the designated authorities.
The patent holder ought to be an elderly or extremely elderly person.
Section 80TTB
The interest received on deposits made by a resident senior citizen or super senior citizen in a bank or post office, including interest from savings accounts, fixed deposit plans, and post office deposit plans, may be deducted from their income. Beginning in FY 2018–19, the deduction for interest income earned would be capped at Rs. 50,000.
Section 80U
Senior people or super senior citizens who are residents and have a mental impairment or handicap are eligible for the deduction under Section 80U. This deduction is set at Rs. 75,000, and if the senior citizen or super senior citizen has serious disabilities, it rises to Rs. 1.25 lakhs.
The amount that senior citizens or super senior citizens who participate in reverse mortgage schemes get as a loan is not taxable. Seniors or super seniors can mortgage a home they own to obtain interest payments on the value of the property under the reverse mortgage scheme. The EMI payments serve as a reliable source of income for them for the duration of their lives. The residential property is sold to pay off the loan after the senior citizen or super senior citizen passes away. Furthermore, if they do not receive income from a business or profession, resident senior citizens and super senior citizens are likewise exempt from paying any advance taxes on their income. After the fiscal year ends, they use self-assessment tax to file their taxes. The individual's taxable income is determined when the income is totaled and the allowable deductions are subtracted. The correct tax slab is then applied to this taxable income.
Benefits Available to Senior & Super Senior Citizens
The Income Tax Act of 1961 provides several tax benefits to senior and super-senior individuals, some of which are detailed below:
An increased income exemption cap: Seniors must pay taxes on income over Rs. 3,00,000; for super seniors, the tax threshold is Rs. 5,00,000. Ordinary people are not eligible for this benefit because their ceiling is Rs. 2,50,000.
Standard deduction: They are eligible to deduct Rs. 50,000 from whatever salary or pension income they may be receiving.
Refund of taxes under Section 87A: Senior citizens can request a tax rebate, meaning they won't have to pay any taxes, if their taxable income is up to Rs. 5,00,000.
A larger premium deduction for health insurance: Instead of the Rs. 25,000 that is accessible to other people, senior persons can claim a deduction under Section 80D of up to Rs. 50,000 for medical insurance premiums, provided that the payment is made using online banking channels.
A larger deduction for costs related to the treatment of certain illnesses or ailments: Under Section 80DDB of the Act, they are eligible for a fixed deduction of Rs. 1,00,000 for medical costs paid for specific diseases of themselves or dependent senior citizen relatives.
A larger deduction for interest paid to banks and post offices: Under Section 80TTB, senior citizen taxpayers are eligible to deduct interest earned from savings bank accounts, bank deposits, post office deposits, or cooperative banks up to a total of Rs. 50,000. However, the maximum amount of interest that can be deducted from income for those under 60 is Rs 10,000 for savings bank account interest.
Exemption from paying taxes in advance: If a senior individual has no income from a business or profession, they are not required to pay advance tax. As a result, there is no interest charged for late advance tax payments.
Investment deduction for Senior Citizens Savings Plan: Seniors 60 years of age and above can invest in the Senior Citizens Savings Scheme and receive a Section 80C tax deduction of up to Rs. 1,50,000, saving them money on taxes. Regular interest payments are another guarantee of this plan. The government just announced an 8% interest rate for the quarter ending in January and ending in March of 2022–2023.
Benefits Not Available under New Tax Regime
Seniors and super senior individuals will have to give up the majority of the benefits offered by the previous tax system if they want to adopt the new one. Here is a list of a few of them:
Higher basic exemption threshold for senior citizens
House Rent Allowance (HRA) exemption, as permitted by the previous tax system
Exemption from Leave Travel Allowance (LTA)
Exemption from special allowances
Exemption from the child education allowance
Daily costs associated with employment
Expert tax offset
Interest-only mortgage deduction
Chapter VI A deduction
Conclusion
One of the most significant ways to disclose your entire income and support national growth is to file an income tax return. It assists the government in financing defence and other vital services like healthcare and infrastructure. It is essential to fulfil all tax responsibilities before the deadline to prevent fines and legal ramifications, even as a senior or super senior citizen. Furthermore, because an income tax return is an official document maintained by the government, it has substantial legal significance. You must stay on track by seeking expert advice if you have any concerns regarding your tax liability as a senior or super senior citizen.
FAQ
Q1. Do senior citizens have to file ITRs?
Yes, filing an income tax return is required for older citizens. On the other hand, seniors over 75 who exclusively receive pension and interest payments from the same bank are not required to file income taxes.
Q2. When are seniors exempt from filing income tax returns?
The following circumstances apply before senior citizens are exempt from filing income tax returns:
They are at least 75 years old.
Their pension and interest income make up the entirety of their income
Any account they keep open with the same bank where they get their pension may yield interest income.
The bank has received a declaration from them; TDS is withheld by the bank in accordance with Section 194P.
Q3. Which ITR form is necessary for seniors to file their income tax return?
If a senior citizen's income comes from a salary or pension, rent from a residential property, or money from other sources like interest, they must file an ITR-1. They must file an ITR-2, though, if their income consists of a salary or pension, rent from a residential property, money from the sale of capital assets like stocks or real estate, or money from other sources.
Q4. How much is tax-free income allowed for seniors?
Seniors who are 80 years of age or older can earn up to 5 lakh rupees tax-free, while seniors can earn up to 3 lakh rupees tax-free.
Q5. What is the new regime's standard deduction for senior citizens?
Up to Rs 50,000 can be taken out as a standard deduction by seniors and family pensioners.
Q6. Are pension income deductions available to senior citizens?
Yes, pension or salary income might be reduced by a normal amount of Rs. 50,000 for senior individuals.
Q7. To what extent can seniors deduct interest on fixed deposits?
Under Section 80TTB, senior individuals are eligible to deduct Rs. 50,000 from the interest they receive on fixed deposits.
Q8. How can a senior citizen calculate their income tax liability accurately?
Senior citizens can accurately calculate their income tax liability by considering all sources of income, including pensions, interest, and rental income. Deductions and exemptions applicable to senior citizens, such as medical expenses and standard deductions, should also be taken into account. Utilizing the appropriate income tax slab and factoring in eligible deductions will result in an accurate calculation.
Q9. What types of income are considered for taxation under the senior citizen slab?
The income considered for taxation under the senior citizen slab includes various sources such as pensions, interest from fixed deposits, rental income, and any income generated from investments. Senior citizens need to report and calculate tax on their total income from these sources.
Q10. Is there a specific tax slab for very senior citizens?
Yes, there is a specific tax slab for very senior citizens (individuals aged 80 years and above). They are eligible for a higher exemption limit, and the income tax slab is designed to provide additional benefits to this age group.
Q11. Is the income tax exemption limit higher for senior citizens?
Yes, the income tax exemption limit is higher for senior citizens compared to other age groups. They enjoy a higher basic exemption limit, and this limit is further elevated for very senior citizens. This allows senior citizens to have a certain threshold of income exempted from taxation.
Q12. Can a senior citizen who is not a resident apply for a reimbursement under Section 87A?
No, NRI senior citizens are not qualified to receive the Section 87A reimbursement. As a result, if their income exceeds Rs. 2,50,000, they must pay tax.
Q13. Which tax bracket applies to senior citizens who are not residents (NRIs)?
Over 60-year-old non-resident senior citizens are not eligible for the same benefits as resident senior citizens. Therefore, NRI elderly persons fall under the same tax slab as regular people under the age of 60. If they make more than Rs. 2,50,000 per year, they must pay taxes.
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