Senior citizens are resident individuals who comes between the age group of 60 to 80 years.
As there are number of sources of income for senior citizens that includes pension, senior citizen saving scheme, interest on savings, rental income, fixed deposit, reverse mortgage and post office scheme. According to Central Board of Direct Taxes directive, senior citizen’s cases can’t be investigated unless an appraisal is required dependent on trustworthy information.
Tax slab for senior citizen (FY 2018-19)
|ANNUAL INCOME SLABS||
|Less than Rs. 3 Lakhs||
No Tax rate applicable
|More than Rs. 3 Lakhs however less than Rs. 5 Lakhs||
|More than Rs. 5 Lakhs however less than Rs. 10 Lakhs||
|More than Rs. 10 Lakhs||
Under Section 87A of income Tax Act, if the income of any individual senior citizen is up to INR 5 Lacs then a full tax reduction of INR 12,500 would be applicable on the tax liability from FY 2019-20 & AY 2020-21. This states that the individuals earning up to INR 5 lacs in FY, their tax amount will be nil.
Senior Citizens are allowed to the types of deductions as below:
- Section 80DDB offers a higher deduction for the sickness of specified diseases.
- A senior citizen is eligible for a deduction of the medical insurance premium up to INR 50,000. These are further absolved from advanced tax payment.
- Also, for TDS there are no deductions on earned premium for Senior citizens.
Filing Income Tax Forms
It is mandatory for senior citizens to file income tax if they have income during the financial year. The associated Income Tax Return forms are required to be filled by the senior citizens to do as such:
ITR I – Senior citizen whose total income is inclusive of:
- Salary or pension
- Income from house properties
- Income from the other sources (barring revenue from horse racing or winning lottery)
ITR 2 – Senior citizen whose total Income is inclusive of:
- Salary or pension
- Income from house property
- Capital gains
- Income from the other sources (comprising winning from horse racing and lottery)
- In the event where the income of an additional individual, like, a spouse or other member must be merged with the income of the senior citizen.
Note: Senior citizen who has no business income have an advantage of not paying any advance tax even if tax liability exceeds Rs.10000.