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Senior Citizen Tax Slab: A Detailed Guide

  • Apr 18, 2024

Tax benefits encompass provisions within tax laws that offer opportunities to decrease tax liabilities for individuals who meet specific eligibility criteria.

These benefits manifest in various forms, such as tax deductions, exemptions, and credits. A tax deduction diminishes the taxable income, while a tax credit directly offsets the tax owed. Additionally, tax exemption entails excluding certain monetary amounts from taxable income, potentially resulting in complete relief from tax obligations. This article explores the tax benefits available to senior and super senior citizens, subject to distinct senior citizen tax slab rates. It delves into understanding these slab rates and elucidates the tax advantages accessible to senior citizens.

Who are Senior Citizens?

The Income Tax Department divides senior citizens into two age groups for calculating income tax in India:

1. Senior Citizens - Individuals aged 60 or older at any point in the relevant tax year fall into this group.

2. Super Senior Citizens - Individuals aged 80 or above during any period in the relevant tax year.

Tax Slabs for Senior Citizens

Let's take a look at the tax slabs for senior citizens:

Individuals aged over 60, known as senior citizens, can pay taxes under either the old or new tax regime. The current tax slab for senior citizens, implemented by the central government through the Finance Act of 2020, offers discounted tax rates, which will be detailed later in the article.

If someone opts for the senior citizen tax slab, they'll follow the discounted tax rates outlined in Section 115 BAC, but with conditions on claiming exemptions, deductions, and losses.

Let's know the income tax slab for senior citizens, as per the old regime for FY 2023-24:

1. Up to Rs. 3,00,000 ? No Tax

2. From Rs. 3,00,001 to Rs. 5,00,000 ? 5% of income over Rs. 3,00,000

3. From Rs. 5,00,001 to Rs. 10,00,000 ? Rs. 10,000 20% of income over Rs. 5,00,000

4. Above Rs. 10,00,000 ? Rs. 1,10,000 30% of income over Rs. 10,00,000

The tax slabs for senior citizens for FY 2024–25 for a given income slab for senior citizens as per the new regime are as follows:

1. Up to Rs. 3,00,000 ? No Tax

2. From Rs. 3,00,001 to Rs. 5,00,000 ? 5%

3. From Rs. 5,00,001 to Rs. 10,00,000 ? 20%

4. Above Rs. 10,00,000 ? 30%

How to Calculate the Income Tax for Senior Citizens FY 2024-25?

Senior citizens' income tax is calculated using their salary, house rent, and other money they get. However, seniors get a more significant break from paying taxes than younger adults. To work out current income tax slab for senior citizens, you look at all the money they make first. Then, take away what they can deduct. Then, use the tax rates for this year.

You don't have to pay income tax on your first Rs.3 lakh. If you earn between Rs.50 lakh and Rs. 1 crore, there's an extra tax of 10% on top of your income tax. If you earn over Rs. 1 crore, the additional tax is 15% on top of your income tax.

Also Read about How Gains from Intraday Trading Are Taxed?

Tax-Free Income for Senior Citizens

Senior citizens have various ways to lower their taxes. They also have several options for earning tax-free income in India.

1. You can invest in the Senior Citizen Savings Scheme.

2. A pension scheme for senior citizens - Pradhan Mantri Vaya Vandana Yojana - offers guaranteed returns.

3. You can invest in life insurance annuities, which should be at most 10% of the life cover.

4. You can earn a certain amount from interest on bank deposits.

5. You can get it from the Public Provident Fund.

Income Tax Benefits for Senior Citizens

1. Higher Exemption Limit:

There is an exemption limit in the income slab for senior citizens. Here, individuals are not required to pay taxes. In India, senior citizens have a higher limit of Rs. 3,00,000. In this case, senior citizens don't have to pay taxes, file an ITR, or face a TDS deduction.

2. Deduction on Interest Income:

Under Section 80 TTB, senior citizens can get a deduction of up to Rs. 50,000 on bank/post office interest and Savings Bank Account(s) interest.

3.Deduction from the Premium Paid for Medical Insurance:

Senior citizens can deduct up to Rs. 50,000. It covers health insurance premiums under Section 80D of the Income Tax Act.

4.Exemption from Paying Advance Tax:

According to Section 208, individuals with an estimated tax liability of Rs. 10,000 or more for a year must pay advance tax. Senior citizens are exempt from this unless they earn from 'Profits and Gains from Business or Profession.'

5. Medical Expense Deduction for Treating Specific Ailments:

Under Section 80DDB, individuals below 60 can deduct up to Rs. 40,000 for treating specific diseases. For senior citizens, the limit is Rs. 1,00,000.

Conclusion

Filing taxes is crucial to declare income, support national development, and fund vital services like healthcare and defense in the country. Timely compliance is essential to evade penalties. Moreover, it holds legal importance as an official record with the government, especially for senior citizens.

Team Sharekhan
by Team Sharekhan

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