Income Tax Slabs for Senior Citizens for Old/New Tax Regime

From 2020-21, salaried individual taxpayers and pensioners who don’t have business income can choose between two tax regimes. These are namely the new concessional tax regime and the existing old one. If taxpayers over the age of 60 are looking for new income tax slabs for FY 2023-24 (AY 2024-25), keep reading. You would get the new budget income tax slabs for senior citizens here, along with several other related facts, including the tax slab for super senior citizens! 

Who is Considered as a Senior Citizen in India?

The law describes any resident individual above the age of 60 but below the age of 80, as on the last day of the previous financial year, as a senior citizen.

Who is Considered as a Super Senior Citizen in India?

Any resident individual above the age of 80, as on the last day of the previous financial year, is termed a super senior citizen as per law.

The basic salary, fixed allowances, house rent allowance, and other sources of income form the basis for calculating a senior citizen’s income tax. The tax calculating procedure for senior citizens is similar to that for individuals under 60 years. 

However, it must be noted that a higher exemption limit under the old tax regime is applicable for senior and super senior citizens as compared to those aged lower than 60 years. 

Income tax for pensioners or senior citizens is levied on every source of income. This includes pension, fixed deposits, post office schemes, rental income, interest or earnings from savings schemes, or reverse mortgages. During the tax calculation for senior citizens, gratuity and retirement benefits should be excluded. 

For calculating a senior and super citizens’ income tax, the entire income is considered along with the new income tax slab for senior citizens for FY 2023-24 and allowable deductions. An income tax calculator can be a handy tool for determining taxable income. If you want to know your approximate tax liability, provide the following details: 

• Assessment year for which a senior citizen/ super senior citizen is willing to calculate income tax
• Residential status, type of taxpayer 
• Standard deductions of Rs 50,000 from Salary (available under new tax scheme from A.Y. 2024-25. This was not available under new tax scheme in A.Y. 2023-24)
• Education cess @ 4%, according to the income tax slab applicable for senior citizens 
• Surcharge (if applicable) 
• Total tax liability 
• Due date of submission of income tax return (ITR) 
• Income from salary 
• Income from house property (if applicable) 
• Income and capital gains from other sources 
• Gains or profit from any profession or business 
• Agricultural income (if applicable) 
• Completion of assessment for income tax return 
• TCS or TDS (if applicable)

The deductions applicable for senior citizens aged 60 and above as per the Union Budget 2023-24 are as follows:

• Pension: There exists a standard deduction of ₹50,000 (available under new tax scheme from A.Y. 2024-25. This was not available under new tax scheme in A.Y. 2023-24) yearly for pensioners, including family pensioners. This is applicable for pensions in the form of taxed annuity payments similar to salaried income. It comes under Section 80D.

• Rebate under Section 87A: Under the new income tax regime, the amount of the rebate under Section 87A for FY 2023-24 (AY 2024-25) has been increased to ₹7 lakhs from ₹5 lakhs in FY 2022-23. It implies that senior and super senior citizens can now avail of ₹25,000 tax relief, which was earlier ₹12,500. However, the rebate under the old tax regime remains the same, which is ₹25,000 for taxable income up to ₹5 lakhs. 
• Health Insurance: As per Section 80D, senior citizens can claim up to ₹50,000 yearly deductions for their medical expenses and/or health insurance premium. In addition, dependent seniors can claim a deduction ranging to a maximum of ₹1 lakh for critical illnesses, as mentioned previously. This comes under Section 80DDB.

An individual taxpayer choosing the new tax regime would have to forego most tax exemptions that were otherwise available under the old or existing income tax regime. 

Under the new tax regime for senior citizens and super senior citizens for FY 2023-24, no increased basic limit of exemption exists for these two age categories. This implies that any individual, irrespective of age, would have ₹3 lakhs as the basic exemption limit for a given financial year. For FY 2022-23, this basic exemption limit was set at ₹2.5 lakhs.

Some common benefits for senior citizens, which might help ease their financial responsibilities, include: 

• Senior citizens are exempted from paying advance tax for a given financial year if they do not have business income.  
• They can also avail of the benefit of the Reverse Mortgage Scheme, under which, if they receive EMIs, they do not have to pay any capital gains tax on such house transfers. 

In case senior citizens and super senior citizens opt for the new tax regime for FY 2023-24, they would have to forego certain income tax benefits, which are as follows: 

• House Rent Allowance (HRA) 
• Leave Travel Allowance (LTA) 
• Other Special Allowances include - relocation allowance and helper allowance. 
• Children Education Allowance 
• Daily expenses in the course of employment 
• Professional tax 

• Interest on housing loan under Section 24 (if property is self occupied, such deduction is not available. However, interest on let-out property is available)

• Deduction under Chapter VI-A such as 80C, 80D, 80E, 80TTB, etc. However, deduction of notified pension schemes under 80CCD(2) and other deductions under 80JJAA and 80CCH(2) are available.

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