How to calculate the taxable income for senior citizens…

 

Like all jobholders, Senior Citizens are also required to pay Income Taxes and File Returns. Income Tax rules offer additional tax benefits to Senior Citizens. To claim these benefits, the individual must be of the age of 60 years or above but less than 80 years at any time during the respective year.

 

As per the Income-Tax Act, 1961, An individual resident who is 60 years or above in age but less than 80 years at any time during the previous year is considered as Senior Citizen for Income Tax purposes. A Super Senior Citizen is an individual resident who is 80 years or above, at any time during the previous year.

 

The new tax regime excludes benefits like Section 80C for medical insurance premiums, interest income. The old regime still offers benefits under different sections. The taxable income for senior citizens is subject to specific tax rules and exemptions.

 

The taxable income is calculated for senior citizens as follows:-

 

1. Income Sources: Consider all sources of income, including Salary, Pension and Interest Income from Savings Accounts, Fixed Deposits and Rent from property, Capital Gains from Investments, etc.

 

2. Exemptions and Deductions: Senior Citizens are eligible for higher deduction limits as well exemption benefits compared to other taxpayers. Senior Citizens would be required to take into consideration such higher limits for deductions and exemptions while calculating their taxable income.

 

3. Rebate u/s 87A: Calculate the applicable rebate under Section 87A. Senior Citizens would be eligible for a rebate under Section 87A if their total income is up to a specified limit (Rs. 5 lakhs under the old tax regime and Rs. 7 lakhs under the new tax regime).

 

4. Tax Calculation: Once the Taxable Income is determined, apply the applicable tax rates to calculate the tax liability. It is pertinent to note that senior citizens and super senior citizens enjoy a higher basic exemption limit of Rs 3 lakhs and Rs 5 lakhs, respectively.

 

5. Calculation of Taxable Income: By subtracting the eligible exemptions and deductions from the total income, we will get the taxable income.

 

6. Surcharge & Health and Education CESS: The applicable surcharge, if any Health and Education CESS @ 4% would be computed to arrive at the final tax liability. In case there are any interest consequences or penalty late filing fees, the same would be added to the tax liability amount.