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  • Income Tax for Senior Citizens

    Tax Exemption for Senior Citizens:

    A senior citizen is an individual resident (man or woman) who is 60 years old or more but below 80 years as on the last day of the previous year (born on or after April 1st, 1935 and before April 1st, 1955). Senior citizens’ source of income include pension, rental income, interest on savings, fixed deposits, senior citizen saving scheme, reverse mortgage and post office scheme. According to a Central Board of Direct Taxes directive, cases of senior citizens cannot be scrutinised unless an assessment is necessary on the basis of credible information.

    Exemption limit has been increased from Rs.2,50,000 to Rs. 3 lakh for assessment year 2015-16. Under sections 80D and 80DDB, senior citizens can avail of deductions up to Rs.30,000 on their health insurance premium and Rs.60,000 to Rs.80,000 for medical treatment respectively. Under Varishtha Bima Yojana, senior citizens need not pay service tax on premium. If senior citizens want to gift objects, the items are exempted from tax. Senior citizens who have public provident funds can avail of exemption up to Rs.1,50,000 for the assessment year 2015-16. Short-term capital gains will be exempt from tax if the basic limit at 15% is not exceeded. Under section 80L, senior citizens can avail of tax exemptions on interest up to Rs.12,000 p.a.

    Income Tax for Senior Citizens 2015-16:

    The following table shows the income tax slabs and rates applicable for senior citizens for the assessment year 2015-16

    Annual Income slabs Rates
    Below Rs.3 lakh No tax rates applicable
    Above Rs.3 lakh but below Rs.5 lakh 10%*
    Above Rs.5 lakh but below Rs.10 lakh 20%
    Above Rs.10 lakh 30%

    *Rebate under Section 87A is applicable if the income is not above Rs.5 lakh. A rebate of Rs. 2,000 will be applicable for those with an annual income upto Rs.5 lakh. Tax payable will, therefore, be Rs. 23,000. For those who have an income above Rs. 5 lakh, the tax payable will be Rs. 25,000 + 20% tax.

    The education cess has remained unchanged at 3%. A surcharge of 12% (10% in FY 2014-15) will be payable for the financial year 2015-16 provided the income is above Rs.1 crores.

    Calculation of Income Tax for Senior Citizens:

    Income tax calculator helps you calculate how much tax you are required to pay in addition to the applicable deductions. Income tax calculator not only calculates your total tax but also computes income from your house property. There are several online aggregators and financial websites which provide an income calculator wherein you can fill in all the required details such as the assessment year, age and your annual taxable salary. To calculate your taxable salary, you should have a clear picture of all the important components of your salary package such as your basic salary, fixed allowances, house rent allowance and bonus, if any. You have to enter the aforementioned details excluding retirement benefits such as gratuity and PF into the online calculator. You have to enter details related to TDS as well. To calculate the payable tax, you have to submit details regarding house property such as annual rental income as well. Several websites offer income tax calculators in an excel sheet format which can be downloaded.

    Income Tax Limit for Senior Citizens:

    The basic exemption limit for Senior citizens (60 years to below 80 years) is Rs.3 lakhs. Senior citizens can avail of several benefits in terms of interest earned on savings schemes. Most banks provide a higher interest rate to senior citizens compared to the rest. On fixed deposits, tax is deducted at source, thereby, making it a tax-free investment option for senior citizens. In most cases, senior citizens can avail of exemptions on penalties or are charged a meagre sum, if they opt for premature withdrawal of fixed deposits to deal with medical emergencies.

    Income Tax for Super Senior Citizens (Above 80 Years):

    A super senior citizen is a resident individual (man or woman) who is 80 years old during the previous year (born before April 1st, 1935). The basic exemption limit for very senior citizens (80 years and above) is Rs.3.50 lakhs. Super senior citizens over 80 years can avail of deductions up to Rs.30,000 for their medical expenses from their total income.

    The following table shows the income tax slabs and rates applicable for super senior citizens for the assessment year 2015-16 (income earned from April 1st 2014 to March 31st 2015)

    Income Rates
    Below Rs.5 lakh Nil
    From Rs.5 lakh to Rs.10 lakh 20%*
    Above Rs.10 lakh 30%

    *Surcharge is applicable where income exceeds Rs. 1 crore, subject to marginal relief.

    News About Income Tax Refund

    • Income Tax Dept keeps 31st March to measure senior citizen eligibility criteria

      While making an allowance for a greater exemption limit of taxation obligation for those aged above 60, it will be reflected to have reached a certain age on 31st March if his or her date of birth after 1st April as the Central Board of Direct Taxes stated based on an SC decision in 1986, which commanded all its Assessing Officers (AOs) to determine the age while estimating tax obligation of a citizen. Though there is no income tax imposed for senior citizens earning above INR 3 lacs per year, the same for very senior citizen is INR 5 lacs. As the age is verified, it should start from 12 AM.

      04th August 2016


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