Who is a Senior Citizen and a Very Senior Citizen?
Under Income tax for Senior Citizens the terms “Senior Citizen” and “Very Senior Citizen” are defined as follows:
- Senior Citizen – A person who is 60 years or older but less than 80 years old at any time during the relevant financial year.
- Very Senior Citizen – A person who is 80 years or older at any time during the relevant financial year.
These age-based classifications are significant because they determine the income tax exemptions and benefits available to individuals.
Senior Citizens and Very Senior Citizens enjoy higher exemption limits and additional benefits compared to those under 60 years of age.
Sources of Income for Senior Citizens and Super Senior Citizens
In India, senior citizens (aged 60 to 79) and super senior citizens (aged 80 and above) have various sources of income to support themselves. Here are some common sources –
- Pension: Many retirees receive a pension from their former employers or from the government.
- Interest on Savings: Earnings from savings accounts or fixed deposit schemes provide a steady income.
- Rental Income: Renting out property can be a significant source of income.
- Capital Gains: Profits from the sale of property or investments.
- Senior Citizen Savings Schemes (SCSS): A government-backed savings instrument that offers regular income with tax benefits.
- Reverse Mortgage Schemes: Allows senior citizens to convert part of the equity in their home into cash income.
- Post Office Deposit Schemes: These schemes offer interest income and are quite popular among senior citizens.
Additionally, the government provides certain tax benefits to senior and super senior citizens, such as higher exemption limits before paying income tax, and some may be eligible for a monthly government pension as their primary source of income. It’s important to note that the exact sources of income may vary based on individual circumstances and preferences.
Income Tax Slabs Rate for Senior Citizens (FY 2023-24) – Old Tax Regime
| Income Range (₹) | Tax Rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Income Tax Slabs Rate for Super Senior Citizens (FY 2023-24) – Old Tax Regime
| Income Range (₹) | Tax Rate |
|---|---|
| Up to 5,00,000 | Nil |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Additionally, a tax rebate up to ₹12,500 is applicable if the total income does not exceed ₹5,00,000. This rebate is not applicable for Non-Resident Indians (NRIs). The tax calculated will be increased by Health and Education Cess at 4% of the income tax. Surcharge may also be applicable depending on the total income
Income Tax Slab Rate For Senior Citizen and Super Senior Citizen – New Tax Regime
| Income Tax Slabs | Tax Rate |
|---|---|
| Up to Rs.3,00,000 | None |
| Rs.3,00,001 to Rs.5,00,000 | 5% |
| Rs.5,00,001 to Rs.7,50,000 | 10% |
| Rs.7,50,001 to Rs.10,00,000 | 15% |
| Rs.10,00,001 to Rs.12,50,000 | 20% |
| Rs.12,50,001 to Rs.15,00,000 | 25% |
| Above Rs.15,00,000 | 30% |
However, under the new tax regime, this rebate limit has increased to ₹25,000 if the taxable income is less than or equal to ₹7 lakhs. The health and education cess along with surcharge remains the same.
Conditions when Senior Citizens are not Required to file ITR?
Section 194P of the Income Tax Act, 1961, was introduced in the Finance Act 2021. It provides conditional relief to senior citizens aged 75 years and above from filing income tax returns (ITR). Here are the key points regarding Section 194P:
- Eligibility: Senior citizens who are 75 years or older and are residents of India.
- Income Sources: Should have income only from pensions and interest earned from the same bank where the pension is deposited.
- Declaration: The senior citizen must submit a declaration to the specified bank, which includes details like PAN, Pension Payment Order (PPO) Number, total income, deductions under Section 80C to 80U, and rebate under section 87A.
- TDS Deduction: The specified bank will deduct TDS after considering the deductions under Chapter VI-A and rebate under 87A.
- Exemption from ITR Filing: Once the TDS is deducted by the specified bank, the senior citizen is exempted from filing the ITR.
This section aims to reduce the compliance burden on senior citizens who have a simple income structure consisting only of pension and interest income. It became applicable from 1st April 2021.
Benefits available to the Senior and Super Senior Citizens?
In India, senior and super senior citizens are entitled to several tax benefits and deductions under the Income Tax Act. These benefits are designed to provide financial relief and support to older individuals. Here are the key deductions available:
- Higher Basic Exemption Limit:
- The basic exemption limit is INR 3,00,000 to senior citizens (aged 60 to 79) and
- The basic exemption limit is INR 5,00,000 to super senior citizens (aged 80 and above)
- the standard deduction for senior citizens is ₹50,000 under both the old and new tax regimes
- Section 80D (Medical Insurance Premium):
- Deduction up to INR 50,000 for medical insurance premium.
- An additional deduction of INR 50,000 is available for the medical expenditure of very senior citizens (80 years or above) if no insurance is taken.
- Section 80DDB (Medical Treatment of Specified Diseases):
- Deduction up to INR 1,00,000 for the treatment of specified diseases.
- Section 80TTB (Interest on Deposits):
- Deduction up to INR 50,000 on interest earned from deposits with banks, post offices, and cooperative banks.
- Section 80C (Investments in Specified Instruments):
- Deduction up to INR 1,50,000 for investments in specified savings instruments like
- 5 year fixed deposits
- Investment in Equity Linked Savings Scheme (ELSS)
- Investment in Public Provident Fund (PPF)
- Life insurance premiums (LIP)paid
- Investment in Senior Citizen Saving Scheme (SCSS) or
- National Saving Certificates etc.
- Section 80CCD (1B): Additional deduction for NPS contributions up to ₹50,000, over and above the limit of ₹1,50,000.
Note:
If the senior or super senior citizens opt for the new tax regime then they have to Forego specified deductions and exemptions
Income Tax Returns filing for Senior Citizens and Super Senior Citizens
Filing income tax returns is an important annual task for all citizens, including senior and super senior citizens. In India, a senior citizen is defined as an individual who is 60 years or above but less than 80 years during the previous year. A super senior citizen is an individual who is 80 years or above.
For the Assessment Year (AY) 2024-2025, senior citizens who are 75 years and above and have only pension income and interest income from the same bank where they receive their pension, may not be required to file income tax returns. This is due to Section 194P of the Income Tax Act, which provides conditions for exempting such senior citizens from filing returns.
However, it’s important to note that many seniors mistakenly believe they need not file returns if tax has been deducted at source (TDS) on their income. This is not correct, and they should check their Form 26AS and Annual Information Statement (AIS) to claim any TDS refund.
For senior citizens who do need to file returns, the Income Tax Department has specified forms such as –
| Return Form | Brief Description |
| ITR – 1 | Also known as SAHAJ is applicable for individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand. |
| ITR – 2 | It is applicable to an individual or an Hindu Undivided Family not having income chargeable to income-tax under the head “Profits or gains of business or profession” |
| ITR – 3 | It is applicable to an individual or a Hindu Undivided Family who has any income chargeable to tax under the head business or profession |
| ITR – 4 | Also known as SUGAM is applicable to individuals or Hindu Undivided Family or partnership firm who have opted for the presumptive taxation scheme of section 44AD/ 44ADA/44AE. |
Frequently Asked Questions
1. Is there any special exemption for interest income for Senior Citizens?
Yes, under Section 80TTB, a deduction of up to ₹50,000 is allowed on interest income earned from deposits with banks, post offices, or cooperative societies.
2. Are Senior Citizens and Super Senior Citizens required to pay advance tax?
Senior and Super Senior Citizens who do not have income from business or profession are not required to pay advance tax. They can pay their entire tax liability at the time of filing their income tax return.
3. What are the tax benefits available under Section 80D for Senior and Super Senior Citizens?
Deduction for medical insurance premium: Up to ₹50,000.
Medical expenditure for very senior citizens (who are not covered under health insurance): Up to ₹50,000.
4. What are the benefits under Section 80DDB for Senior and Super Senior Citizens?
Deduction for medical treatment of specified diseases: Up to ₹1,00,000.
5. Is there any benefit under Section 80C for Senior and Super Senior Citizens?
Yes, they can claim deductions up to ₹1,50,000 for investments in specified instruments like PPF, NSC, 5-year bank fixed deposits, etc.
6. Do Senior and Super Senior Citizens get any additional benefit in filing returns?
They have a simpler form (ITR 1 or ITR 4) if they have income from salary, one house property, and other sources (interest, etc.).
7. What is the rebate under Section 87A for Senior and Super Senior Citizens?
A rebate of up to ₹12,500 is available for individuals with a total income of up to ₹5,00,000. This rebate is available for all taxpayers, including Senior and Super Senior Citizens.
8. Are there any tax benefits on the sale of property for Senior and Super Senior Citizens?
Long-term capital gains from the sale of property can be exempted if reinvested in specified bonds under Section 54EC or in another residential property under Section 54.
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