Tax Exemption for Senior Citizens
Going by the definition, a senior citizen is an individual resident of India (man or woman) who is at least 60 years of age or more but less than 80 years of age. For the purpose of Income Tax calculation, this age is calculated as on 1st of April of that financial year. This implies that any individual, man or woman, who was born before 1st April 1957 but after 1st April 1937 would be considered a senior citizen in India currently.
In general, there is a difference in case of senior citizen in terms of the design of their salary structure, their income tax calculations and the pension issued. In most of the cases, senior citizens are offered some additional benefits such as senior citizen concession, senior citizen discounts or subsidized cost structure. An important thing to note here is the way how the tax structure is designed for senior citizens and how their salary and tax computation is done.
Income Tax slab for Senior Citizens for FY 2024-2025
The table below has the complete information about the income tax slab that will be followed according to the recent budget issue:
| Existing Tax Regime | New Tax Regime | ||
| Income Slab | Income Tax Rate | Income Slab | Income Tax Rate |
| Up to Rs. 3,00,000 | Nil | 0 – Rs. 3,00,000 | Nil |
| Rs. 3,00,001 – Rs. 5,00,000 | 5% above Rs. 3,00,000 | Rs. 3,00,000 – Rs. 6,00,000 | 5% |
| Rs. 5,00,001-Rs. 10,00,000 | Rs. 10,000 + 20% above Rs. 5,00,000 | Rs. 6,00,000 -Rs. 9,00,000 | 10% |
| Above Rs. 10,00,000 | Rs. 1,10,000 + 30% above Rs. 10,00,000 | Rs. 9,00,00 – Rs. 12,00,000 | 15% |
| Rs. 12,00,000 – Rs. 15,00,000 | 20% | ||
| Above Rs. 15,00,000 | 30% | ||
The tax structure is revisied every year in the Union Finance Budget and any changes as recommended by the Finance Ministry in co-ordination with the President of India are announced in this budget announcement made around February every year. The changes proposed in the budget are then made effective for the next fiscal that begins from 1st April of that year.
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Other tax slabs for senior citizens 2024-2025
In addition to the income tax, senior citizens are also liable to pay education cess and other higher education cess on the income tax paid. The calculation of these two taxes is done on the basis of the below table as per the rates mentioned here:
| Annual Income Slabs | Education Cess | Secondary and Higher Education Cess |
| Below 3 lakh | Nil | Nil |
| Above Rs 3 lakh but less than Rs 5 lakh | 2% of income tax paid | 1% of income tax paid |
| Above Rs 5 lakh but less than Rs 10 lakh | 2% of income tax paid | 1% of income tax paid |
| Above Rs 10 lakh | 2% of income tax paid | 1% of income tax paid |
Calculation of Income Tax for Senior Citizens 2024-2025
Calculation of tax for senior citizens explained below is done according to the rates mentioned in table 1 old/existing tax regime. In addition to the applicable deductions, income tax calculation also considers income from any house property. Senior citizens enjoy an extra benefit of Rs 50,000 as compared to a non-senior citizen since the latter has a free limit of only up to Rs 2.5 lakh.
To calculate the income tax for senior citizens, you should have a clear picture about all the major components in the salary of senior citizens. You should have exact information about fixed pay, basic salary, fixed allowances, house rent allowance, special allowance, variable pay, medical components and any other taxable components. Other than this, you should also have information about the tax saving schemes which senior citizen has enrolled for or is entitled to by default. For instance, tax is not calculated on tax-exempted components of the salary such as HRA, Investments declared under section 80C, 80D, 80DD, 80L etc. Please note that annual rental income from house property should also be clearly highlighted for the final calculation of income tax.
Most of the websites nowadays offer income tax aggregators or calculators using which you can calculate the gross salary and net income of any salaried individual. As an input, you need to mention the major components of the salary along with other exempted elements and the tool will give you an approximate value of net income. Apart from this, some websites also offer an excel tool that can be downloaded and used to calculate tax for senior citizens.
Exemptions for Senior Citizens
All the senior citizens in India are entitled to receive numerous benefits as compared to other citizens of the country.
In addition to the free limit of Rs 3 lakh, senior citizens also enjoy benefits under section 80 C, section 80 D and section 80 DDB.
Senior citizens get additional tax exemption on an amount of Rs 30,000 for health insurance. Apart from this, they can avail benefits on an amount between Rs 60,000 to Rs 80,000 for medical treatment purpose.
Senior Citizens are not required to pay service tax on the premium amount. Even the gift objects which they give to others are exempted from tax payment.
For senior citizens, short term capital gains will be exempted from tax if the limit of 15% is not altered.
In addition to this, there is a tax exemption provision under section 80 L. As per this section, they can avail an exemption on interest up to Rs 12,000 p.a.
Senior citizens are also exempted from payment of advanced tax in case they do not have any income from their own business. In such cases, they are required to only pay self-assessment tax on the amount equivalent to their total income.
They are exempted from payment of tax on earned interest.
In addition to this, senior citizens are not required to pay taxes on the amount that they receive on the Reversed Mortgage Scheme. This is opposite to Home loan scheme. In this scheme, regular payments are received by senior citizens lifetime by mortgaging their own house while still occupying the house themselves. In this case, the ownership is retained by senior citizen.
They can submit form 15H for non-deduction of TDS on the interest accrued on Fixed Deposit. This is only applicable if the senior citizen falls in zero tax bracket and thus is automatically exempted from tax formalities.
Filing of Income Tax Returns for senior Citizens
Like a normal citizen of the country, income tax filing is also mandatory for all the salaried senior citizens of India. They have to file Income Tax Return (or ITR) to claim their tax refund. They are required to fill the two forms mentioned below for income tax returns.
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ITR 1: This is for those individuals whose total income includes:
- Salary or pension income
- Income from own house or owned property
- Income from any other sources
ITR 2: This is for those individuals whose total income includes:
- Salary income or pension income
- Income from house or owned property
- Short or long-term Capital gains
- Income from any other sources
- Incidents where Income from any other members of the family is combined such as that of spouse
- Rebate Scheme in Income Tax for senior citizens
This scheme is applicable for all those individuals where the total income does not exceed Rs 5 lakh. This rebate is offered under section 87A. A rebate amount of Rs. 2000 is applicable for individuals who have an annual income of up to Rs 5 lakh. Thus, the total payable tax amount for an individual will be Rs 23,000.
However, for an individual whose income is more than Rs 5 lakh, the total tax amount will be Rs 25,000 + 20% of tax.
Other benefits for senior citizens
Senior citizens enjoy extra benefits from all the private sector and government-nationalized banks.
Most of the banks offer a higher rate of interest on the savings account as compared to the rate offered to normal citizens.
There is an additional 0.5% interest rate that is offered by all banks on fixed term deposits for senior citizens. Another key benefit on fixed deposit is the way tax is deducted at source. This makes it a tax-free investment option for all the senior citizens.
Also, pre-mature withdrawal of fixed deposits in case of medical emergencies is exempted from any penalties by law under certain situations. In case even if there is a fee charged for premature withdrawal of fixed deposit, the fee amount is very low as compared to normal citizen.
The article outlines the key features, structure and slabs applicable for calculation of Income tax for senior citizen. It also tells us about the key exemptions for which a senior citizen is eligible for under different schemes.