Groww Logo
Home>Personal Finance>Tax>Income Tax for Senior Citizens
SHARE

Income Tax for Senior Citizens

The Income Tax Act, 1961, levies a tax on every individual who earns an annual income over the tax-exempt limit, at a prescribed rate. In this regard, a senior citizen’s earnings can exist in the form of pension, interest on savings, fixed deposits, rental income, reverse mortgage, etc. According to the ITA, these sources of earning are taxable under income tax for senior citizens

Senior Citizen Age for Income Tax

According to the law, a senior citizen is any person who is 60 to 80 years of age and is a citizen of India. A resident individual aged between 60-80 years with an annual income of over Rs. 3,00,000 is liable to pay the prescribed tax amount.

A super senior citizen is an individual who is over 80 years of age. The Income Tax Act levies a tax on the income of a super senior citizen if his/her annual income exceeds Rs. 5,00,000.

Income Tax Slabs for Senior Citizens

The government introduced the senior citizen tax slab in 2022, which is optional and co-exists with the tax slab previously in place. This new concessional income tax regime with reduced tax rates, thus, is an alternative for those taxpayers who are willing to forego the existing tax exemptions and deductions in place. 

As per the current income tax slab, taxation on the income of senior citizens is as follows: 

Income range Rate of income tax  Health and education cess
Up to Rs. 3,00,000  Nil Nil
Over Rs. 3,00,000 and below Rs. 5,00,000 5% of total income minus Rs. 3,00,000 4%
Over Rs. 5,00,000 and below Rs. 10,00,000  (20% of total income minus Rs. 5,00,000) + Rs. 10,000  4% 
Above Rs. 10,00,000 (30% of total income minus Rs. 10,00,000) + Rs. 1,10,000 4%

 Additionally, senior citizens are subjected to a surcharge based on their payable income tax, which is applicable as follows –

  • If the total income is more than Rs. 50 lakhs and up to Rs. 1 crore, surcharge at a rate of 10% of income tax is levied.
  • If the total income exceeds Rs. 1 crore, 15% of income tax is levied as a surcharge. 

The pre-existing income tax slab for senior citizens is summarised below:

Income range Rate of income tax  Secondary and Higher Education Cess Education Cess
Up to Rs. 3,00,000  Nil  Nil Nil
Over Rs. 3,00,000 and below Rs. 5,00,000 10% of total earnings minus Rs. 3,00,000 1% of income tax 2% of income tax
Over Rs. 5,00,000 and below Rs. 10,00,000 (20% of total earnings minus Rs. 5,00,000) + Rs. 20,000 1% of income tax 2% of income tax
Above Rs. 10,00,000  (30% of total earnings minus Rs. 10,00,000) + Rs. 1,20,000 1% of income tax 2% of income tax

Here, 12% of income tax computed is payable as a surcharge when the net income stands over Rs. 1 crore.

Income Tax Slab for Super Senior Citizen

As per the current income tax slab, taxation on the income of super senior citizens is as follows: 

Income range Rate of income tax  Health and education cess
Up to Rs. 5,00,000  Nil Nil
Over Rs. 5,00,000 and below Rs. 10,00,000  20% of total earnings minus Rs. 5,00,000  4% 
Above Rs. 10,00,000 (30% of total earnings minus Rs. 10,00,000) + Rs. 1,00,000 4%

Super senior citizens are subjected to a surcharge based on their payable income tax as follows:

  • If the total income is more than Rs. 50 lakhs and up to Rs. 1 crore, surcharge at a rate of 10% of income tax is levied.
  • If the total income exceeds Rs. 1 crore, 15% of tax is applicable as a surcharge.

The above income tax slab for super senior citizens exists alongside the previous tax slab, which is summarised below:

Income range Rate of income tax  Secondary and Higher Education Cess Education Cess
Up to Rs. 5,00,000  Nil  Nil Nil
Over Rs. 5,00,000 and below Rs. 10,00,000 20% of total earnings minus Rs. 5,00,000  1% of tax 2% of tax
Above Rs. 10,00,000  30% of total earnings minus Rs. 10,00,000 + Rs. 1,00,000 1% of tax 2% of tax

Income Tax Benefits for Senior Citizens

The Income Tax Act offers several deductions and benefits on income tax for senior citizens, which includes the following:  

Higher exemption limit

Exemption limit refers to the threshold of income up to which an individual is not liable to pay any tax. The basic tax exemption for non-senior citizens in India is Rs. 2,50,000. On the other hand, senior citizens enjoy a higher exemption limit of up to Rs. 3,00,000. Therefore, a senior citizen need not pay any tax, file an ITR or face TDS deduction if his/her annual income is up to the prescribed limit.

Deduction on interest income

Under Section 80TTA, individuals below 60 years of age may claim a standard deduction for senior citizens up to Rs. 10,000 as interest on Savings Bank Account(s). Section 80TTB allows senior citizens to claim a deduction of up to Rs. 50,000 on bank/post office as well as on interest on Savings Bank Account(s).

Deduction for the premium paid for medical insurance

For senior citizens, the deduction limit on payment of health insurance premium is Rs. 50,000, under Section 80D of the Income Tax Act. This deduction available to other citizens is Rs. 25,000. 

Benefit of standard deduction

Income tax rebate for senior citizens FY 2021-22, who receive a pension from their former employees can claim a deduction up to Rs. 40,000 against such salary income.

Deduction pertaining to medical expenses for treatment of specified disease or ailment 

Under Section 80DDB, an individual up to 60 years of age may claim a deduction up to Rs. 40,000 on medical treatment of specified diseases or ailments. This limit is Rs. 1,00,000 for senior citizens. 

Exemption from paying advance tax

As per Section 208, any individual whose estimated tax liability for a given income year is Rs. 10,000 or more, is liable to pay an advance tax. Senior citizens need not pay this tax unless they earn under the head of ‘Profits and Gains from Business or Profession’.

The government recognises the significance of easing out the financial burden on pensioners. The law, therefore, proffers special income tax benefits for senior citizens, which alleviates their financial burden.

Income Tax for Senior Citizens - FAQs

Q1. What is the typical deduction for seniors?

According to the most recent amendments to the Income Tax Act, the standard deduction for older citizens is ₹50,000.

Q2. How much may a senior citizen make tax-free?

A senior person can earn up to 3 lakh in tax-free income, while super senior citizens above the age of 80 can earn up to 5 lakh in tax-free income.

Q3. What is the senior citizen health insurance tax benefit limit?

According to Section 80D of the Income Tax Act, older adults can receive a tax benefit of up to 55,000 (this includes annual health exams) provided they have chosen a legitimate health insurance plan and are paying the required annual payment.

Q4. What is the maximum age at which Senior Citizens are required to pay income tax?

This is not determined by age, but rather by the older citizen’s basic income (this includes rent allowances, fixed and other sources of income). However, the exemption ceiling for elderly and super senior persons is greater, at 3 lakh and 5 lakh, respectively.

Q5.What form do I need to use to file my income tax returns?

If you earn a salary or pension, income from your home, or income from other sources, you must file Form ITR-1. If your income comprises a salary or a pension, income from a residential property, income from short/long term capital gains, or income from other sources, you must file ITR 2.

ⓒ 2016-2022 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 3.2.0
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  ICICI PRUDENTIAL |  HDFC |  NIPPON INDIA |  ADITYA BIRLA SUN LIFE |  SBI |  UTI |  FRANKLIN TEMPLETON |  KOTAK MAHINDRA |  IDFC |  DSP |  AXIS |  TATA |  L&T |  SUNDARAM |  PGIM |  INVESCO |  LIC |  JM FINANCIAL |  BARODA PIONEER |  CANARA ROBECO |  HSBC |  IDBI |  INDIABULLS |  MOTILAL OSWAL |  BNP PARIBAS |  MIRAE ASSET |  PRINCIPAL |  BOI AXA |  UNION KBC |  TAURUS |  EDELWEISS |  NAVI |  MAHINDRA |  QUANTUM |  PPFAS |  IIFL |  Quant |  SHRIRAM |  SAHARA |  ITI