Income Tax Slab for Senior Citizen

All about Senior Citizen Tax Slab

According to recent estimates from the United Nations Population Division, the total number of Indians aged 60 years and above is predicted to reach 19% of the country’s total population by 2050.

This prediction pegs the total number of senior citizens in the country at 323 million. Going by this data, the next pressing question that arises is the consequent economic, social and more importantly, healthcare challenges.

Taking such liabilities under consideration, the exemption limit on taxation for senior citizens and super senior citizens has been revised since the assessment year 2015-2016. Further, the income tax benefits for senior and super-senior citizens are also significantly higher than that for individuals below 60 years of age.

But who are considered senior and super senior citizens in India?

Let us take a look.

Who is Considered as a Senior Citizen in India?

According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is Considered as a Super Senior Citizen in India?

A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.

Income Tax Slab for Senior Citizens - FY 2019-20

The tax liabilities for senior citizens are calculated on the basis of their salary, house rent and fixed allowances, alongside other income sources.

Now, assuming that most senior citizens in India do not have a steady source of income, they are eligible for a higher exemption limit than those below 60 years of age. This exemption limit stands at up to Rs. 3 Lakh for individuals above 60 years of age.

Following is an illustration of the income tax rates for senior citizens in India:

Income Tax Slabs	Rate of Tax
Individuals with income of up to ₹3 Lakh	Not applicable
Individuals with income between ₹3 Lakh and ₹5 Lakh	5%
Individuals with income between ₹5 Lakh and ₹10 Lakh	20%
Individuals with income exceeding ₹10 Lakh	30%

There is an additional health and education cess of 4% over the applicable tax slab.

There is also an additional surcharge over the applicable tax rate for individuals with an income above Rs. 50 Lakh.

This is as follows:

Surcharge for individuals with a total income between Rs. 50 Lakh and Rs. 1 Crore – 10% of income tax.
Surcharge if the person’s total income exceeds Rs. 1 Crore – 15% of income tax.

Income Tax Slab for Senior Citizens - FY 2019-20

The tax liabilities for senior citizens are calculated on the basis of their salary, house rent and fixed allowances, alongside other income sources.

Following is an illustration of the income tax rates for senior citizens in India:

Income Tax Slab for Super Senior Citizens - FY 2019-20

Similar to tax liability on senior citizens, the tax on individuals above 80 years of age is also calculated on the basis of income generated from various sources like pension, interest on savings, fixed deposits, post office schemes, reverse mortgages, etc.

Following is a table illustrating the income tax slabs for super-senior citizens in India:

Income Tax Slabs	Rate of Tax
For individuals with income of up to ₹5 Lakh	Not applicable
For individuals with income ranging between ₹5 Lakh and ₹10 Lakh	20%
For individuals with income exceeding ₹10 Lakh	30%

There is an additional 4% health and education cess applicable over these tax slabs for super senior citizens.

Additionally, super-senior citizens with an income exceeding Rs. 50 Lakh per annum will also have to pay a surcharge over their applicable tax rates.

The surcharge is as follows:

Surcharge for individuals with a total annual income between Rs. 50 Lakh and Rs. 1 Crore - 10% of their income tax.
Surcharge for individuals with an annual income exceeding Rs. 1 Crore - 15% of their income tax.

Income Tax Rebate for Senior Citizens and Super Senior Citizens

As determined in the 2019 Union Budget, senior and super-senior citizens can claim tax exemptions under Section 87A of the Income Tax Act 1961, if they meet the conditions mentioned below –

Must be a resident individual.
Their total income after every applicable deduction is not more than Rs. 5 Lakh.
The total amount for the tax rebate is not more than Rs. 12,500. It means that if the individual’s total taxable payable is less than Rs. 12,500, the amount will be the total exemption.

But before calculating your tax liability, you should also learn about the income tax exemptions for senior citizens that can make life significantly easier for you. Let us take a look!

Income Tax Exemptions for Senior and Super Senior Citizens - Union Budget 2018-19

As per the announcements made through the Union Budget 2018-19, there are three principle provisions for tax exemptions that can be enjoyed by individuals above 60 years of age.

One of the vital areas where you can particularly benefit from these exemptions is healthcare. Owing to the rising cost of healthcare in the country, the government has offered tax benefits on health insurance policies that can reduce the financial liability of seeking treatment by quite an extent.

Following are the tax benefits that can be availed by individuals, as put forward by the Union Budget –

Under the provisions of Section 80D of the Income Tax Act, individuals between 60 and 80 years of age can claim a deduction of up to Rs. 5,000 on their health insurance policy premiums.
Under Section 194A, the deduction on interest income generated from deposits with the post office and bank has been expanded from Rs. 10,000 to Rs. 50,000. This benefit is also applicable for interest income from various fixed and recurring deposit schemes.
Under Section 80DDB, individuals can claim a deduction of up to Rs. 1 Lakh for the medical expenditure of specific critical illnesses. Previously this deduction limit was at Rs. 60,000 for senior citizens and Rs. 80,000 for super senior citizens.

With such income tax exemption limit for senior citizen, seeking healthcare has become much easier for senior and super senior citizens of India.

Income Tax Benefits for Senior and Super Senior Citizens in India

As compared to those below 60 years of age, senior and super senior citizens enjoy better income tax benefits. Some of them are as follows:

Senior citizens can avail a deduction of up to Rs. 50,000 on the premium paid for their health insurance policies. They are also exempted from advance tax payments during the year during which they do not generate any business income.
They are exempt from TDS on the interest earned from various bank deposits and securities.
Under Section 80DDB, senior citizens can avail a higher deduction for the treatment of specific critical diseases.
The amount received under a reverse mortgage scheme is also tax-free for individuals above 60 years of age.

Thus, with such income tax benefits, the government has tried to reduce the tax burden on senior and super senior citizens in the country. So, before you pay your income taxes, make sure you are aware of the applicable tax slabs, exemptions, and the subsequent tax benefits to ensure that you live a financially independent life in your golden years.

FAQs about Income Tax Slab for Senior Citizens

✓ What is the form through which senior citizens can file their income tax returns?

Senior citizens earning salary or income through pension, or income from residential property or other sources can use ITR-1 to file their income tax returns. In case the income includes long and short-term capital gains, apart from the instances above, individuals will have to file their returns through ITR- 2.

✓ Are NRIs eligible to claim tax rebate under Section 87A?

No, one of the first criteria that individuals have to satisfy to avail deductions under Section 87A of the Income Tax Act is that they will have to be residents of India. Thus, non-residents cannot claim the rebate under Section 87A.

✓ Can the tax benefits be availed for more than one health insurance policy?

Yes, tax benefits can be availed for more than one health insurance policy. However, you will have to meet the applicable eligibility criteria and ensure that all the premiums are paid to avail the tax benefits.