Income Tax Act 1961 Benefits for Senior Citizens and Super Senior Citizens

The government has introduced a series of tax provisions and exemptions aimed at helping older individuals manage their finances and tax liabilities more effectively in a move to provide financial relief to India's senior citizens.

These changes offer significant benefits to those aged 60 and above, as well as super senior citizens aged 80 and above during the respective financial year.

Here's a closer look at these senior-citizen-friendly tax reforms:

Income Tax Act 1961 Higher Exemption Limits

For ordinary taxpayers, the basic exemption limit stands at Rs. 2.50 lakh for the assessment year 2021-22. However, for senior citizens, the limit has been raised to Rs. 3 lakh, and super senior citizens are not required to pay taxes or file returns for income up to Rs. 5 lakh.

Income Tax Act 1961 Exemption from Advance Tax

Senior citizens are exempt from advance tax payments if they don't have income under "Profits and Gains of Business or Profession."

Standard Deduction Benefits

Starting from the assessment year 2020-21, individuals can claim a standard deduction of up to Rs 50,000 against their salary income.

Income Tax Slabs for Senior Citizens (60-80 years)

The income tax slabs for senior citizens are highly favourable. Here's a summary:

- Income up to Rs. 3,00,000: Nil tax.

- Income from Rs. 3,00,001 to Rs. 5,00,000: 5% (with tax liability being nil if income is up to Rs. 5 lakh).

- Income from Rs. 5,00,001 to Rs. 10,00,000: Rs. 10,000 plus 20% of the amount above Rs. 5,00,000.

- Income above Rs. 10,00,000: Rs. 1,10,000 plus 30% of the amount above Rs. 10,00,000.

Choice of Tax Regime for Senior Citizens

Senior citizens can opt for either the old or new tax regime for the assessment years 2021-22 and 2022-23.

Income Tax Slabs for Super Senior Citizens (80 years and above)

Super senior citizens also enjoy favourable tax slabs:

- Income up to Rs. 2,50,000: Nil tax.

- Income from Rs. 2,50,001 to Rs. 5,00,000: 5%.

- Income from Rs. 5,00,001 to Rs. 7,50,000: Rs. 12,500 plus 10% of the amount above Rs. 5,00,000.

- Income from Rs. 7,50,001 to Rs. 10,00,000: Rs. 37,500 plus 15% of the amount above Rs. 7,50,000.

- Income from Rs. 10,00,001 to Rs. 15,00,000: Rs. 75,000 plus 20% of the amount above Rs. 10,00,000.

Higher Deductions

Senior citizens can claim higher deductions, such as up to Rs. 50,000 for health insurance premium under Section 80D and for medical expenses incurred on their health, provided no amount is paid for health insurance. Additionally, there's a deduction of up to Rs. 1 lakh for specified medical treatment.

Deduction for Interest Income

Senior citizens can claim a deduction of up to Rs. 50,000 for interest income earned on bank deposits and post office savings accounts.

Eligibility to File Income Tax Return

Very senior citizens aged 80 years or more can file returns manually if their total income exceeds Rs. 5 lakh or if there is a refund claim.

Form No. 15H for Non-deduction of TDS

Senior citizens can submit Form No. 15H to avoid TDS on certain incomes, provided their tax liability is nil.

No ITR Filing for Pension and Interest Income

Starting from the assessment year 2022-23, senior citizens aged 75 years or above with only pension and interest income from specified banks are not required to file ITRs. Tax is deducted by the bank after considering allowable deductions and rebates.

These senior-citizen-friendly provisions aim to ease the tax burden and enhance the financial well-being of older individuals in India. With these changes, senior citizens can better plan for their financial future and enjoy a more comfortable retirement.