Income Tax Slab for Seniors and Super Senior Citizens FY 2023-24 (AY 2024-25)

According to the Income-tax Act of 1961, a senior citizen is someone who is 60 years or older but under the age of 80. A super senior citizen is someone who is 80 years or older. This page quickly describes all of the income tax provisions that apply to resident senior citizens and super senior citizens.

The Income Tax Act has classed resident individuals into three parts-

• Individuals aged up to 60 years
• Senior citizens - Individuals aged 60 to 80 years
• Super senior citizens are those over the age of 80.

Income Tax Slab for Senior Citizens

Senior citizens over the age of 60 can pay taxes under either the old or new tax regimes. The central government introduces the new tax regime through the Finance Act of 2020, which includes concessional tax rates, as mentioned later in the article. Non-resident elderly people, on the other hand, are ineligible for the tax slabs listed below since they are subject to the standard income tax laws.

Individuals who pay tax under the new tax framework are eligible for concessional tax rates under section 115 BAC, subject to certain requirements. However, under the previous tax scheme, senior citizens were entitled to unconditional exemptions and deductions.

As per the previous tax regime, the income tax slab rates for older citizens for FY 2023-24 (AY 2024-25) are as follows:

Income Tax Slab for Super Senior Citizens

Super elderly individuals above the age of 80 can benefit from both the old and new tax regimes, since they can choose which is more favorable.

According to the former tax regime, the income tax slab rates for super elderly citizens for FY 2023-24 (AY 2024-25) are as follows:

The above-mentioned tax for elderly and super-senior citizens will be enhanced by the Health and Education Cess at 4% of the income tax.

In addition, a surcharge is applicable based on total income as follows:

Income Tax Slab Rates Under the New Tax Regime for Senior and Super Senior Citizens

Individual taxpayers are subject to a new tax regime under the Finance Act of 2020, which requires them to pay concessional tax. However, they must forego many of the deductions and exemptions that are available to them.

The income tax slab rate under the new regime for FY 2023-24 is:

The health and education cess remains at 4%. The surcharge is applied on the basis of total income, as follows:

Note:

The CBDT has stated that a person born on April 1st is regarded to have reached a specific age on March 31st, the day before his birthday anniversary. Specifically, the subject of attaining the age of eligibility for being called a senior/very senior citizen would be decided using the criteria listed above. As a result, a resident individual whose 60th birthday comes on April 1, 2024, will be deemed as having reached the age of 60 in the fiscal year 2023-24 and will be eligible for the higher basic exemption level of 3 lakh while computing his tax liability for the fiscal year 2024-25 under the previous tax regime. Similarly, a resident individual whose 80th birthday comes on April 1, 2024, will be deemed as having reached the age of 80 in FY 2023-24 and will be eligible for the higher basic exemption ceiling of Rs. 5 lakh in computing his tax obligation for AY 2024-25 under the old tax regime.

Senior and extremely senior citizens' sources of income are:

Senior and extremely senior citizens typically receive income from the following sources:

• Pension Interest on savings or fixed deposit schemes.
• Rental Income from Renting Out a House
• Income from capital gains.
• Senior citizen savings plans
• Reverse Mortgage Schemes
• Post office deposit plans that pay interest, among many others.

Senior and super-senior citizens will forgo benefits if they take advantage of the new tax regime

Benefit from greater income exemption limits of Rs. 3,00,000 and Rs. 5,00,000.

Leave Travel Allowance

House Rental Allowance (HRA)

Conveyance Allowance

Children's Education Allowance

Benefits include daily expenditures and relocation allowance.

Helper's allowance

Other special allowances.

Professional Tax and Entertainment Allowance

Interest on housing loans (Section 24) for self-occupied properties

Deductions under Chapter VI-A include 80C, 80D, 80E, and 80TTB. However, they can avail deductions under Section 80CCD(2), i.e. employer payment to NPS, 80CCH contribution to Agniveer fund, and 80JJAA, i.e. deduction for hire of new employees.

Benefits Available to Seniors and Super Senior Citizens

Senior and super-senior individuals are entitled for many tax incentives under the Income-tax Act of 1961, which are described below:

Higher income exemption limit

Senior citizens are required to pay tax on income exceeding Rs. 3,00,000, whereas this maximum was Rs. 5,00,000 for very senior citizens under the previous tax regime. This advantage is not available to regular folks because the maximum is Rs. 2,50,000 for them.

Standard deduction

If they receive a salary or pension, they can deduct Rs. 50,000 from that income.

Tax rebate under Section 87A

Senior citizens with taxable income of up to Rs. 5,00,000 can seek a tax rebate under the old tax regime, which means they do not have to pay any tax. Under the new tax regime, the overall income cap is Rs. 7 lakhs, with a rebate of up to Rs. 25,000.

Higher deduction for medical insurance premiums

Senior citizens can claim a deduction of up to Rs. 50,000 under the former tax regime for medical insurance premiums under Section 80D rather than Rs. 25,000, which is accessible to other individuals if paid using online banking channels. The same deduction cannot be claimed under the new tax system.

Increased deduction for expenses incurred for treatment of selected diseases or ailments

They can claim a fixed deduction of Rs. 1,00,000 for medical expenses paid for specific diseases of themselves or dependent elderly citizens, as listed in the Act under Section 80DDB.

Higher deduction for bank and post office interest.

Under Section 80 TTB, senior individuals can claim a total deduction of Rs. 50,000 for interest received on savings bank accounts, bank deposits, post office deposits, or cooperative banks. People under the age of 60 can only claim a deduction of up to Rs 10,000 for interest generated in savings bank accounts.

Exemption from Advance Tax Payment

If a senior individual does not make any money from a business or profession, they are exempt from paying advance tax. As a result, no interest is charged on late payment of advance tax.

When do senior citizens not have to file income tax returns?

Senior citizens are not needed to file income tax returns under the following conditions:

• Their age is 75 years or older.
• Pension and interest income make up the entirety of total income. Interest income can come from any account at the same bank where they receive their pension.
• They made a declaration to the bank.
• The bank deducts TDS under Section 194P and offers the benefit of a reverse mortgage scheme.

If a senior citizen transfers his residence under a reverse mortgage scheme in which he receives monthly installments, he is not obligated to pay capital gains tax on the transfer.

Deduction for investment in the Senior Citizens Savings Scheme

Senior citizens over the age of 60 can invest in the Senior Citizens Savings Scheme and save tax by claiming a deduction of up to Rs. 1,50,000 under Section 80C of the old tax regime. This scheme also provides regular and greater interest payments. The same deduction cannot be claimed under the new tax system.

Calculating tax for senior persons

Senior and super senior persons' tax liabilities are calculated by adding their income from all sources. This yields the aggregate gross total income.

Then, under the old regime income tax slabs valid for FY 2023-2024 (AY 2024-2025), senior individuals can claim a variety of deductions and exemptions to reduce their tax payment. The deductions and exemptions include the following:

Deduction for Section 80C

This clause permits elderly and super senior citizens to deduct up to INR 1.5 lakhs from their gross total income for qualified investments and expenses. The list of common assets covered under Section 80C includes the following:

• Five-year fixed deposits
• Investment in Equity-Linked Savings Schemes (ELSS)
• Investment options include PPF,
• life insurance premiums, SCSS,
• and National Saving Certificates.

Deduction under section 80CCC

If you pay premiums for a specific pension plan, you can deduct such payments under this clause. The maximum limit is INR 1.5 lakhs, including section 80C. Furthermore, 50,000 is allowed under section 80CCD(1B), and a further deduction under section 80CCD(2) is allowed in respect of employer contributions up to a ceiling of 10% of pay; for government employees, the limit is 14% of salary income. The tax credit under section 80CC(2) is available under the new tax structure planned in the 2020 budget.

Deduction under Section 80CCD (1B)

This provision allows for a deduction of up to INR 50,000 for investments made into the National Pension Scheme. This deduction exceeds the entire deduction provided under Sections 80C and 80CCC. An NPS account can be started at the age of fewer than 65 years.

Deduction for Section 80D

Health insurance premiums paid for senior people or super senior citizens are eligible for a deduction under this provision up to a limit of INR 50,000. The same clause also allows for a tax advantage of up to Rs 5000 on expenses made for preventive health checkups. If older citizens do not have medical insurance, their medical expenses (other than cash payments) can be claimed as a deduction under section 80D.

Deduction for Section 80DD

If a resident senior citizen or super senior citizen incurs expenses for the treatment or maintenance of a crippled dependent as prescribed, they can claim a deduction under this clause. The deduction limit is predetermined and based on the disability incurred. A fixed deduction of INR 75,000 is permitted. For severe disability (80% or more), the deduction limit rises to INR 1,25,000.

Deduction for Section 80DDB

Section 80DDB covers expenses incurred for treating particular conditions. If resident senior citizens, super senior citizens, or their dependents suffer from pre-specified ailments, they may deduct expenses associated with their treatment. From FY 2018-19, the deduction limit will reflect the actual expenditures spent, up to a maximum of INR 1 lakh.

Section 80G

This section allows senior citizens and super senior citizens to claim a deduction for charitable donations given to specific causes and institutions. Depending on the charity chosen, the deduction can be 50% or 100% of the donated amount.

Deduction for Section 80GGC

Section 80GGC allows senior citizens and super senior citizens to deduct contributions made to political parties or electoral trusts. A financial donation is not tax deductible.

Deduction for Section 80RRB

If a resident senior citizen or super senior citizen owns a registered patent and earns royalties on that invention, the royalty can be deducted from taxable income. The maximum amount of royalties allowed as a deduction would be INR 3 lakh. Furthermore, to claim the deduction, the following conditions must be met by the senior citizen or super senior citizen:

• He or she should be an Indian resident.
• He or she should have registered the patent on or after April 1st, 2003 under the Patents Act 1970.
• To claim the deduction, the senior citizen or super senior citizen must submit a certificate (Form-10CCE) to the tax authorities, which should be signed by the specified authority.

The elderly or extremely senior citizen should be the patentee.

Deduction for Section 80 TTB

If a resident senior citizen or super senior citizen makes deposits in a bank or post office, the interest gained on such deposits, including interest from savings accounts, fixed deposit schemes, and post office deposit schemes, can be deducted by the senior citizen. The deduction for interest income produced would be limited to INR 50,000.

Deduction for Section 80U

The Section 80U deduction is offered to resident senior citizens and super senior citizens who have a handicap or mental retardation. This deduction is set at INR 75,000 and rises to INR 1.25 lakhs if the elderly citizen or super senior citizen has serious disability.

Aside from the different deductions allowed under Chapter VI A of the Income Tax Act, the amount received as a loan by senior citizens or super senior citizens through the reverse mortgage program is not taxable. Under the policy of reverse mortgage, the senior citizen or super senior citizen can receive EMIs for the value of a property that belongs to him/her by mortgaging the property. The EMI payments continue throughout the senior citizen's or super senior citizen's lifetime, providing a consistent stream of income. When a senior citizen or super senior citizen dies, the residence is sold to repay the loan.

Furthermore, resident senior citizens and super senior citizens are exempt from paying any advance tax on their income provided they do not earn money from a business or profession. They file their taxes through self-assessment tax after the fiscal year ends. The individual's taxable income is calculated after aggregating his or her income and deducting any allowable deductions. The taxable income is subsequently taxed in accordance with the applicable tax slab.