With the income tax we pay, a large portion of what we accomplish today contributes to both our growth and the progress of the entire nation.
According to the provisions of The Income Tax Act of 1961, an income tax is a direct tax that a government imposes on the income of its citizens. Every year, the government can alter the tax rates and income brackets in the Union Budget.
For income tax purposes, a resident is deemed a senior citizen if they were 60 or older but under 80 at any point in the previous year.
The income of senior citizens comes from a variety of sources, including pensions, interest on savings, fixed deposits, rental income, and much more. According to the IT Act of 1961, senior citizens must pay income tax on all sources of income that are included in their taxable income for a given fiscal year.
The income earned by senior citizens are taxed as mentioned.
|Old Regime||New Regime|
|Income Tax Slab||Slab rates||Income Tax Slab||Slab rates|
|Upto 3 Lakhs||Nil||Upto 2.5 Lakhs||Nil|
|3 Lakhs- 5 Lakhs||5%||2.5 Lakhs- 5 Lakhs||5%|
|5 Lakhs- 10 Lakhs||20%||5 Lakhs- 7.5 Lakhs||10%|
|Above 10 Lakhs||30%||7.5 Lakhs- 10 Lakhs||15%|
|10 Lakhs- 12.5 Lakhs||20%|
|12.5 Lakhs- 15 Lakhs||25%|
|Above 15 Lakhs||30%|
Note: The above data has been compiled from https://www.incometax.gov.in/
Now that you are aware of how the income tax slabs work, the citizens above the age of 60 are eligible for some exemptions.
People above the age of 60 or 80 will require significant financial resources for their medical care as they get older. Senior citizens are given a benefit on account of paying the health insurance premium up to Rs. 50,000 under section 80 D. Previously, the deduction for health premium payment was limited to Rs.30,000/- for older citizens.
Additionally, senior citizens who live in India are exempted to pay tax on interest income up to Rs. 50,000 in a given fiscal year. This is applicable under section 80 TTA of the Income Tax Act and will consider interest earned on deposits made to banks, savings accounts, and/or post offices. However, interest earned in excess of Rs. 50,000 would be subject to tax at the senior citizen slab rate.