Income Tax Rules for Senior Citizens

Income Tax Rules for Senior Citizens – Senior Citizens Income Tax Slabs, Rebates and Limits

Who Precisely Are Senior Citizens?

Persons above sixty but under the age of 80 and who essentially are citizens of the country are widely considered as senior citizens for income tax purposes under the Income Tax Act of 1961.

Even though someone is older, a non-resident has not deemed a senior citizen under the Income Tax Act.

What are Senior Citizen’s Different Income Sources?

A senior citizen’s income might be actually earned in a number of different ways. Senior citizens typically make their income from the following sources:

  • A pension plan
  • Savings account interest or fixed deposit programs
  • Rental revenue derived from the renting of a residential property
  • Profits from Capital Gains
  • Schemes for Saving for Senior Citizens
  • Programs for reverse mortgages
  • Postal deposit plans that also pay interest
  • As well as numerous others

What is the Senior Citizens Exemption Limit?

The exemption limit is the proportion of income over which a taxpayer is not compelled to pay income tax.

The baseline tax exemption threshold for regular individual taxpayers, up to which they are not actually deemed necessary to pay any tax, is currently set at Rs. 2.50 lakhs. The baseline exemption ceiling for Senior Citizens, on the other hand, is established at Rs. Three lakhs.

To summarize, a resident senior citizen currently receives an additional advantage of Rs. 50,000 in the form of a considerably greater exemption limit as compared to other taxpayers.

Following the Central Board of Direct Taxes explicit instruction and guidelines, specific cases involving senior citizens may not be investigated and prosecuted unless an assessment is required based on solid grounds.

What is the Exemption Current Scheme from Advance Tax Payment?

As per section 207, a senior citizen is exempt from paying advance tax if they possess no income under the heading “Profits and Gains of Business or Profession.”

They purely and simply have to continue to pay the Self-Assessment (SA) Tax, which is determined after the total tax liability for the financial year is established.

Senior Citizens Income Tax Slabs

  • If your income is less than Rs. Three lakhs, no income tax is charged. Furthermore, there is no Health and Education Cess.
  • If your income is between Rs.3 lakh and Rs.5 lakh, your income tax percentage is 5%, and the health and education cess is 4% of your income tax.
  • If your income is between Rs.5 lakh and Rs.10 lakh, your income tax percentage is 20%, and the health and education cess is 4% of your income tax.
  • If your income surpasses Rs. 10 lakhs, the rate of income tax applied is 30%, coupled with the same 4% health and education cess paid to your income tax.
  • A surcharge of 10% of income tax is directly applicable if total income lies between Rs.50 lakh and Rs.1 crore.
  • If your entire income surpasses Rs.1 crore, you would be charged a surcharge of 15% on your income tax.

Scheme for Tax Rebates

Individuals with an overall income that is lower than Rs.5 lakh are eligible for benefits for the Section 87A rebate programme. Taxpayers with yearly revenue of up to Rs.5 lakh would be eligible for an Rs.2,000 rebate. In conclusion, the Tax due will be Rs.23,000.

Individuals with a total income of higher than Rs.5 lakh would have to end up paying Rs.25,000 plus an extra 20% tax.

What Income Tax Return (ITR) forms do Senior Citizens Need To Complete?

Senior citizens must submit an income tax return in order to receive a tax refund successfully.

  • Individuals whose total income up to Rs 50 lakhs includes the following items should submit ITR I:
  • Yearly salary or revenue from pension schemes
  • House or property revenue (the cases where losses have been brought forward from previous financial years should be ignored)
  • Other credible sources of revenue (income from horse racing or winning lottery should be essentially ignored)
  • Individuals whose total income surpasses Rs. 50 lakhs includes the following assets should submit ITR 2.
  • Yearly salary or revenue from pension schemes
  • House or property income
  • Profits in capital
  • Miscellaneous sources of revenue (includes winning from horse racing and lottery)
  • Cases in which the earnings of another individual, such as a spouse or family member, must be integrated with the individual’s income.

Deductions that are Available for Senior Citizens

  • There is a conventional deduction of Rs.40,000 for pension schemes under Section 80D. This is for pensions in the format of annuity payments, which are chargeable under taxation in the same manner as salary is.
  • Section 80DDB essentially allows a taxpayer to deduct expenses for healthcare treatment of specified diseases. This deduction is often legally allowed up to Rs 50,000. However, if the patient is beyond the age of 60 and is dependent, a deduction of Rs 1,000,000 is authorized.
  • Senior persons are subject to tax breaks on interest earnings from post office accounts, fixed deposits, and certain other different types of deposits.

These are generally the biggest source of income for senior people. Senior citizens can deduct up to Rs.10,000 from their savings bank account interest.

In addition, the interest on post office accounts and fixed deposits are tax-deductible up to Rs.50,000. Banks are entitled to deduct Tax Deducted at Source (TDS) from such interest revenue only if it exceeds Rs.50,000 for the financial year.

Form 15H can be filed so that TDS is not deducted on total income that is less than the tax exemption ceiling.

This is fully covered by Section 80TTB.

What are the Other Deductions Available to the Senior Citizen?

Senior citizens can claim tax benefits under Sections 80C, 80D, and 80DDB of the Income Tax Act, in addition to taking advantage of a significantly larger exemption limit.

Other schemes include:

  • Section 80G
  • Section 80GGC
  • Section 80RRB
  • Section 80U

Is it Possible for Senior Citizens to File Their Taxes Online?

Yes, senior citizens can access the online tax filing service as well.

Section 139 of the I-T Act of 1961 requires people whose taxable profit exceeds the basic exemption level in a given accounting period year to file an ITR.

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