The income tax reporting for the fiscal year 2024 and the assessment year 2024-2025 has begun. Senior citizens can enjoy various tax benefits under the income tax regulations. To qualify this, an individual must be 60 years or older but not yet 80 at any time during the year.
Even if the senior citizens are exempted from filing an income tax return (ITR) due to their age, but they must still pay taxes if their income exceeds the exemption limit. The exemption only applies to the filing requirement, not the actual tax liability.
• Pension Income: Mostly senior citizen’s taxable income comes from pensions and other sources. Government commuted pension income (a lumpsum payment) is entirely tax-free. However, the uncommuted pension income is taxable under the “Salaries” heading at the marginal slab rates.
• Private Sector Pensions: Commuted pension income from private companies is also taxed under the “Salaries” category.
Marginal Slab Rates
| Total Taxable Income | Tax Rates As Per New Regime |
| Above ₹15 lakhs | ₹1,87,500 + 30% of total income exceeding ₹15 lakhs |
| ₹12.5 – ₹15 lakhs | ₹1,25,000 + 25% of total income exceeding ₹12.5 lakhs |
| ₹10 – ₹12.5 lakhs | ₹75,000 + 20% of total income exceeding ₹10 lakhs |
| ₹7.5 – ₹10 lakhs | ₹37,500 + 15% of total income exceeding ₹7.5 lakhs |
| ₹5 – ₹7.5 lakhs | ₹12,500 + 10% of total income exceeding ₹5 lakhs |
| ₹2.5 – ₹5 lakhs | 5% |
| ₹0 – ₹2.5 lakhs | Nil |
Exemptions And Deductions
- Basic Exemption Limit: For senior citizens (between 60-80), the exemption limit is ₹3 lakh. For super senior citizens (80 years and above), the limit is ₹5 lakh.
- Tax Rebate: Under Section 87A, individuals with a total income below ₹5 lakhs (previous regime) or ₹7 lakh (current regime) are eligible for a tax rebate up to ₹12,500 or ₹25,000, respectively.
Additional Deductions Available for Senior Citizens
Senior citizens have access to various deductions to reduce their taxable income:
- Section 80D: Health Insurance Premiums
- Senior citizens can claim higher deductions on premiums which are paid for health insurance.
- Section 80TTB: Interest Income
- Deduction of up to ₹50,000 on interest income from the saving accounts, fixed deposits, and other deposits.
- Section 80C: Investments
- Deduction for investments in various tax-saving schemes, including the Senior Citizens Savings Scheme (SCSS).
Steps to Calculate Taxable Income
Here’s a step-by-step guide for senior citizens to calculate their taxable income:
Step 1: Calculate Total Income
Include all sources of income such as:
- Pension Earnings
- Interest from Investments: Savings accounts, fixed deposits, etc.
- Other Sources: Business income, capital gains, rental income, etc.
Step 2: Claim Available Deductions
Senior citizens can claim deductions under various sections of the Income Tax Act as following:
- Section 80D: Health insurance premiums.
- Section 80TTB: Interest income from deposits.
- Section 80C: Investments in tax-saving schemes like SCSS.
Step 3: Apply the Higher Basic Exemption Limit
The current exemption limits are:
- ₹3 Lakh: For senior citizens (60-80 years).
- ₹5 Lakh: For super senior citizens (80 years and above).
Step 4: Calculate Taxable Income
Subtract the deductions claimed in Step 2 from the total income calculated in Step 1. Apply the relevant exemption limit based on age. If the remaining amount exceeds the exemption threshold, it becomes the taxable income.
Also Read: UPI transactions update: HDFC Bank
For Instance:
- Age: 65 years
- Total Income: ₹8,00,000
- Pension Income: ₹4,00,000
- Interest from Fixed Deposits: ₹2,00,000
- Rent from Property: ₹2,00,000
Deductions:
- Section 80C: ₹1,50,000 (invested in SCSS)
- Section 80D: ₹30,000 (health insurance premium)
- Section 80TTB: ₹50,000 (interest income)
Total Deductions: ₹2,30,000
Net Taxable Income:
- Total Income: ₹8,00,000
- Minus Deductions: ₹2,30,000
- Net Taxable Income: ₹5,70,000
Tax Calculation:
- Basic Exemption Limit: ₹3,00,000
- Taxable Income after Exemption: ₹5,70,000 – ₹3,00,000 = ₹2,70,000
- Tax Liability:
- 5% on ₹2,00,000 = ₹10,000
- 20% on ₹70,000 = ₹14,000
- Total Tax Payable: ₹24,000