How is Income Tax Calculated for Senior Citizens?

Every year, the Income Tax (IT) Department cuts a portion from the income of salaried individuals, business owners, senior citizens, and other tax-paying employees/entities as tax. The IT department doesn’t do this directly but relies on the individual taxpayer or organization to file their taxes at the end of the financial year.

However, the IT department and the Government of India aim to provide relief to senior citizens in tax deductions. So, they ensure senior citizens have to pay less than individuals below 60 years of age. Senior citizens are persons between 60 and 80 years of age.

Read on to learn how income tax is calculated for senior citizens and the income tax rates in the financial year (FY) 2023 - 2024.

How is Income Tax Calculated for Senior Citizens?

To calculate how much income tax is payable, senior citizens must add their total income earned from all sources. These sources can include their salary, pension, house rent allowance, fixed deposit or other scheme earnings, capital gains, income from the house/ property they own, and income from other sources. Any gratuity, health insurance, or other retirement benefits earned are exempt from tax deductions.

To simplify things, senior citizens can use an income tax calculator. The income tax calculator needs information like the individual’s residential status, net taxable income, surcharge, education cess, and other factors to calculate their total tax liability.

One also needs to refer to and fill out the ITR form, which they fall under. For senior citizens, these include ITR 1 (or SAHAJ form) and ITR 2. Under ITR 1, the senior citizen’s total income includes income earned from:

• Salary/ pension
• House/ property
  
• Other sources
  

Under ITR 2, the senior citizen’s total income includes income earned from:

• Salary/ pension
• House/ property
• Capital gains
  
• Other sources
  
• Combined sources like spouse/other family members
  

Once you come to your total tax liability, you have to refer to the income tax slab for FY 2023 - 24. Once you have all the details, you can use the calculator to determine your taxable income.

What are the Income Tax Slabs/Rates for Senior Citizens in FY 2023 – 2024?

The Government of India introduced a new tax regime for senior citizens taxpayers in the Union Budget of 2023. Under this regime, senior taxpayers can choose between the recently introduced tax slab/tax rates or the new tax regime of FY 2023 – 2024 onwards.
Under the old tax regime, senior citizens had a lower tax liability than individuals below 60 years of age. However, in the new tax regime, there is no higher tax exemption limit for senior citizens. Here are the income tax slabs/rates for senior citizens in FY 2023 – 2024 under the new tax regime.

Old Tax Regime Slabs

Here are the income tax slabs/ rates for senior citizens in FY 2023 – 2024 under the old regime.

New Tax Regime Slabs

Conclusion

To reduce your taxable income as a senior citizen, you can invest in various tax-saving funds. One of the best tax-saving investments is life insurance. Life insurance is among the best tax-saving plans.

You can choose from savings plans, annuity plans, endowment plans, unit-linked insurance plans, and others that are tax-saving. They can eventually help you create wealth in the long run. Know more about term plans and term insurance at PNB MetLife.

The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability.

The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using tax-saving deductions and exemptions.