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Income earned by senior citizens is taxable according to Indian income tax laws. There are various methods in which a senior citizen can earn income post his retirement period. Such methods include pension, interest on Savings , fixed deposits etc. Although taxable, Indian income tax act has made special provisions for exemptions to senior citizens. Let us read in detail about senior citizen tax slab rates and exemptions:
Tax exemptions for senior citizens:
An individual who belongs to the age group of 60 to 80 years is provided income tax exemption. The exemption limit is set to Rs 3,00,000. As per Indian tax laws, the senior citizen receives higher compensation as compared to other individuals.Calculation of income tax for senior citizens is based on factors such as basic salary, fixed allowances, house rent allowances, and other income sources. To calculate income tax of a senior citizen, all the income sources are taken into account along with applicable tax deductions keeping the income tax slab in mind.Senior citizens tax slab rates belonging to the age group 60 to 80 years is as follows:
| Income tax slabs | Rate of tax | Health and education cess |
| For Income up to Rs. 3 lakh | No tax | NA |
| For Income from Rs. 3 lakh and Rs. 5 lakh | 5% | 4% of income tax |
| For Income from Rs. 5 lakh and Rs. 10 lakh | 20% | 4% of income tax |
| For Income above Rs. 10 lakh | 30% | 4% of income tax |
If total net income is more than ₹50 Lakh up to ₹1 crore, a surcharge of 10 % of income tax is charged.Surcharge is 15% if total income is more than Rs 1 crore.Income tax slab for senior citizens above the age of 80 years is as follows
| Income tax slabs | Rate of tax | Health and education cess |
| For Income (net) up to Rs.5 lakh | No tax | NA |
| For Income (net) from Rs.5 lakh and Rs.10 lakh | 20% | 4% of income tax |
| For Income that exceeds Rs.10 lakh (net) | 30% | 4% of income tax |
Surcharge for senior citizens above the age of 80 years is similar to that of 60 to 80-year group.
Rebate under section 87A
Rebate in income for senior citizens under section 87A is provided for senior citizens with total income less than Rs 5,00,000. A rebate of Rs 2,500 is applicable for individuals with income up to Rs 5,00,000 for AY 2019-20 and up to Rs. 12,500 for AY 2020-21.
Other tax benefits for Senior citizens
Senior citizens in India have better tax benefits as compared to other groups of taxpayers. Tax deduction of Rs 20,000 on medical insurance premium is applicable to senior citizens. Section 80 DDB provides a higher deduction for specific diseases. Also, senior citizens are exempted from paying any tax on the amount received via the Reverse mortgage scheme.Ready to make the most of your money? Start your tax planning journey now!
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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