Income tax needs to pay if any person earns an income in a financial year. The tax rate depends on the average income which the person has earned under the following sections–
- Earnings from Salary
- Earnings from House Property
- Earnings from Capital Gains
- Earnings from Business or Profession
- Earnings from Other Sources
All the five sections of income are combined together for total income which is subject to income tax. There is a tax slab based on which the income calculated aggregating the five sections is calculated. The tax slabs differs from different tax-payers. For senior citizen, tax liability would be calculated differently because the tax slabs and the tax-saving provisions are different for senior citizens. Below are the details –
Who will be considered as senior citizens?
For the income tax purposes people who are aged 60 years and above but below 80 years are called senior citizens. Further, Individuals who are aged 80 years and above are called super senior citizens.
Sources of income for senior citizens
Senior citizens usually earn incomes from the following sources –
- Pension
- Interest on savings account or fixed deposit schemes
- Rental income from renting out a house property
- Senior citizen saving schemes
- Reverse mortgage schemes
- Post office deposit schemes which also pay an interest
Tax slabs for senior citizens and super senior citizens
The tax slabs for senior citizens and super senior citizens differs from the tax slabs of normal individuals as the tax exemption limits are higher for senior citizens. Here are the available slabs for FY 2019-20 ; AY 2020-21 –
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For senior citizens aged between 60 and 80 years
Income level |
Applicable tax |
| Up to INR 300,000 | Nil |
| INR 300,001 to INR 500,000 | 5% of the income exceeding INR 300,000 |
| INR 500,001 to INR 10,00,000 | 5% of the income exceeding INR 300,000
+ 20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above | 5% of the income exceeding INR 300,000
+ 20% of the income exceeding INR 500,000 + 30% of the income exceeding INR 10,00,000 |
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For super senior citizens
Income level |
Applicable tax |
| Up to INR 500,000 | Nil |
| INR 500,001 to INR 10,00,000 | 20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above | 20% of the income exceeding INR 500,000
+ 30% of the income exceeding INR 10,00,000 |
Moreover, under Section 87A of the Income Tax Act, if the income of the senior citizen is up to INR 5 lakhs, a full tax rebate of INR 12,500 would be applicable on the tax liability from FY 2019-20 ; AY 2020-21. This means that for individuals earning incomes of up to INR 5 lakhs in a financial year, no tax amount would be given.
If the income is more than INR 50 lakhs but below INR 1 crore, a surcharge of 10% of the tax calculated would have to be paid. For incomes exceeding INR 1 crore, the surcharge pay would be 15% of the tax liability calculated. Keeping aside the surcharge, health and education cess of 4% of the tax liability would also be paid on the tax calculated.
Tax Calculation for senior citizens
For calculating tax liability of senior citizens, their income from all the sources is combined together. This gives the aggregate taxable income. Thereafter, there are various deductions and exemptions which are available to senior citizens to reduce their tax liability. These deductions and exemptions are the following –
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Deduction under Section 80C
This section allows senior citizens deductions of up to INR 1.5 lakhs from their taxable income for eligible investments and expenses. The list of major investments which are exempt under Section 80C include the following –
- 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.
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Deduction under Section 80CCC
If they pay premiums towards a life insurance pension plan, such premiums paid would be allowed as a deduction under this section. The max limit is INR 1.5 lakhs including the deduction available under Section 80C.
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Deduction under Section 80CCD
Under this section, investments done towards the National Pension Scheme are allowed as a deduction up to a max of INR 50,000. This deduction is over and above the total deduction available under Section 80C and Section 80CCC. Senior citizens can invest in the National Pension Scheme up to 65 years of age.
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Deduction under Section 80D
Health insurance premiums paid for availing health insurance coverage for senior citizens is allowed as a deduction under this section up to a maximum of INR 50,000
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Deduction under Section 80DD
If the senior citizen incurs expenses for the treatment or maintenance of a disabled family member, deduction can be claimed under this section for such expenses. The limit of deduction allowed is fixed and depends on the disability suffered by the family member. If the disability suffered is more than 40% but below 80%, a fixed deduction of INR 75,000 is allowed. For higher disabilities, the deduction limit increases to INR 1.25 lakhs
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Deduction under Section 80DDB
Expenses incurred for treating specific diseases are covered under this section. If senior citizens are suffering from pre-specified diseases, they can claim a deduction of expenses incurred on treating such illnesses. From FY 2018-19 the limit of deduction would be the actual costs incurred up to a maximum of INR 1 lakh.
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Deduction under Section 80G
If senior citizens donating to specified charitable causes and institutions, they can claim a deduction for the donation made. Deduction is allowed either at 50% of the donated amount or 100% of the donated amount depending on the charity chosen.
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Deduction under Section 80GGC
If senior citizens contributing money to a political party, the contribution would be allowed as a deduction under Section 80GGC.
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Deduction under Section 80RRB
If a senior citizen has a registered patent and earns royalty incomes on such patents, the royalty received is allowed as a deduction from taxable income. The maximum amount of royalty which would be allowed as a deduction would be limited to INR 3 lakhs. Also, to claim the deduction, the following terms and conditions should be fulfilled by the senior citizen –
- He or she must be an Indian resident
- He or she must have registered the patent on or after 1st April 2003 under the Patents Act 1970
- For claiming the deduction the senior citizen need to submit to the tax authorities and the certificate should be signed by the prescribed authorities
- The senior citizen must be the patentee
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Deduction under Section 80TTB
If senior citizens has made deposits in a bank or post office, the interest earned on such deposits, including interest from savings account, fixed deposit schemes and post office deposit schemes would be allowed as a tax-free income in the hands of the senior citizen. Deduction on interest income earned would be limited to INR 50,000 form FY 2018-19.
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Deduction under Section 80U
The Deduction under Section 80U is available to senior citizens who are suffering from a disability or mental retardation. This deduction amount is fixed at INR 75,000 which increases to INR 1.25 lakhs if the senior citizen has severe disabilities.
Filing of income tax for senior citizens
Income tax is required to be filed by senior citizens if they have any income during the financial year. Though the income is not taxable, the tax return should be filed for claiming a tax refund or for evidence of income earned during a financial year. For filing income tax return, senior citizens would have to use the below income tax forms depending on their income –
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ITR – 1
If the income of the senior citizen includes the following then tax return should be filed in ITR – 1
- Income from house property like rental income
- Income from other sources like dividends earned, interest income, etc.
- The Income from salary or pension
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ITR – 2
ITR – 2 would be required to be filled if the income of the senior citizen arises from the following sources –
- Income from house property like rental income
- Income from other sources like dividends earned, interest income, etc.
- The Income from salary or pension
- Income from Capital gains
- If the income of another earning member (like spouse) is combined with the income of the senior citizen
For more information regarding income tax for senior citizens, contact us.