Senior citizens in India are giving their post-retirement life a silver lining. Gone are the days when they become dependent on their children in old age. Now, they live more actively and have different means of income even after retirement. Some are pensioners; some have their businesses or work as consultants. The best part is they are active taxpayers and contribute to the country's overall development. The Income Tax Department salutes senior residents' willingness to pay tax and keeps on altering the tax slabs for every financial year to ease their pockets. So, below is the new concessional income tax senior citizen regime, tax rates, and benefits for individuals above 60s. But first, let's understand who are considered senior citizens and super senior citizens in India.
Who are Senior Citizens?
Individual residents between the age group of 60 to 80 years, as on the last day of the previous financial year, are considered senior citizens.
Who are Super Senior Citizens?
Individual residents who are above 80 years, as on the last day of the previous financial year, are considered super senior citizens.
Income Tax Slabs for Senior Citizens
Let's start the different income tax slabs for senior citizens:
Income tax slabs for senior citizens for FY 2019-20, 2020-21
- The income tax exemption limit is up to Rs.3 lakh for senior citizen
- If their total income is more than Rs.50 lakh and up to Rs.1 crore: Surcharge is levied 10% of income tax
- If their total income exceeds Rs.1 crore: Surcharge is levied 15% of income tax
Income tax slabs for super senior citizens for FY 2019-20, 2020-21
- The income tax exemption limit is up to Rs.5 lakh for super senior citizens
- If the total income exceeds Rs.50 lakh and up to Rs.1 crore: Surcharge is levied10% of income tax
- If the total income exceeds Rs.1 crore: Surcharge is levied 15% of income tax
Income tax rates and slabs under new tax regime for FY 2020-21
Surcharge- An additional tax payable above the normal income tax is known as a Surcharge. It is the standard deduction for senior citizens. Below is the table for Surcharges to be levied for FY 2019-20 and FY 2020-21:
Rebate - Under Section 87A of the Income Tax Act, rebate means marginally lower tax payment for individuals with income below a specified limit. It is applicable for:
- The individuals who have total income, not above Rs. 5 Lakh
- Individuals with an annual income up to Rs.5 lakh eligible for a rebate of Rs. 2,000
- The individuals who have a total income of more than Rs.5 lakh, the taxable amount is Rs.25,000 + 20% tax.
Tax Benefits for Senior Citizens
Senior and super senior citizens may enjoy the following tax benefits:
Health Insurance: Under section 80D, the health insurance premium for senior citizen get tax exemption up to Rs.50,000.
Section 80TTB: Introduced in the Budget 2018 as a provision under which senior citizens can claim a deduction up to Rs.50,000 from their total income from interest on bank deposits or interest on post office deposits for that financial year.
Exemption on Interest Income: Under section 80TTA, the senior citizens get tax exemption on their interest earned up to Rs.50,000 in the savings bank account, deposits in a bank, or fixed deposits in post-office.
Income Tax Return Benefits: Super Senior Citizens are also eligible for income tax return benefits and can file ITR through Sahaj (ITR 1) or Sugam (ITR 4).
No Tax for Reverse Mortgage: If senior citizens may reverse mortgage any of their accommodation to make monthly earnings, the amount paid in installments to them gets tax exemption.
No Advance Tax: Senior citizens are free from the burden of paying tax in advance.
How can Senior Citizens File ITR?
The senior and super senior citizens are eligible to file their income tax refund. The below Income Tax Return (ITR) forms are required:
ITR I – It is for senior citizens whose total income includes:
- Salary or pension
- Income from house or property
- Income from the other sources except for income from horse racing or winning the lottery
ITR 2 - It is for senior citizens whose total income includes:
- Salary or pension
- Income from house or property
- Capital gains
- Income from the other sources including winning from horse racing and lottery
- Income combined with the income of a spouse or other member
How to calculate total income for senior citizens?
Add the income received as a salary, pension, rent, interest received from fixed deposit/savings account, deposit in the post office, etc.
Can senior citizens avail of tax benefits for more than one health insurance policy?
Yes, senior citizens avail of tax benefits for more than one health insurance policy subject to the eligibility criteria, and the due premium is paid timely.
Are surcharge and cess still mandatory under the new income tax regime for senior citizens?
Yes, 4% of surcharge and cess as per the senior citizens' income is mandatory under the new income tax regime.
What is the maximum age for Senior Citizens in India to pay income tax?
Income tax calculation does not depend on the senior citizens' age but their total income. However, they enjoy a higher exemption limit.
How much is the tax-free income for senior citizens?
For senior citizens, the tax-free income is up to Rs. 3 lakh, and for super senior citizens, is it up to Rs. 5 lakh.
So, don't let your age refrain you from enjoying the second innings of life. With senior citizen health insurance and tax benefits, age gracefully and stay healthy, wealthy, and wise.
Disclaimer: The information above is just for reference. Kindly read T & C of the policy thoroughly. Do refer to IRDAI guidelines for tax exemption conditions.