Navigating the New Tax Regime for Senior Citizens

Updated On: 28th July, 2023

Every year the government of India proposes a budget for the economy. It talks about the government’s income and expenditure along with the tax regime applicable to the general public. This year, the budget was released with minor changes in the tax slabs.

Key Takeaways

• India follows a progressive Tax system, i.e., the more you earn, the more you need to pay towards tax.
• The government has given the options to senior citizens to choose any of the tax regimes, old and new, to pay income tax.
• Tax rebates are provided to senior and super senior citizens, considering restricted sources of income after the age of 60.
• Senior citizens have to pay tax over the total income of ₹3,00,000, against the standard limit of ₹2,50,000.
• Senior Citizens can also claim a deduction on the premium paid towards medical plans under section 80D up to ₹50,000, annually.

India follows a progressive Tax system which is divided into three categories; Individuals, senior citizens, and super senior citizens. In this blog, we will navigate the tax slab for senior citizens, i.e., people above the age of 60 but below 80 years. You must read ahead to understand the new as well as the old tax regime and the benefits it offers.

Income Tax for Senior Citizens

The government has given the options to senior citizens to choose any of the tax regimes, old and new, to pay income tax. Hence you must have a look at both options:

Income Tax slabs for senior citizens as per the Old Tax Regime:
Income tax slabs for senior citizens as per the New Tax Regime:
Along with this, a surcharge is applicable on the basis of total income. You must refer to the following table to build a better understanding:

Do You Know?

The income taxpayers who are opting for concessional rates under the New Tax Regime are not allowed to avail of certain deductions and exemptions, including 80C, 80D, 80TTB, HRA, available in the Old Tax Regime.

Taxation Benefits to the Senior Citizens

If you are a senior citizen, you can avail of the numerous tax benefits offered by the Indian Government, some of which are mentioned below:

Higher Tax Exemption for Senior Citizens

You, as a senior citizen, have the option to pay tax over the total income of ₹3,00,000. However, the benefit is not available for taxpayers below 60 years of age, as the limit is ₹2,50,000. Along with this, super senior citizens who are above the age of 80 have a tax exemption of up to ₹5,00,000 of annual income.

Standard Deduction

If you are earning a salary or have a regular income through a pension, then you can claim a deduction of ₹50,000 on such income. Thus, it can save a good amount from your taxable income.

Rebate under Section 87A

You can claim a tax rebate in case your taxable income is ₹5,00,000. This implies you do not require to pay tax after claiming the deduction.

Higher Deduction on Health Insurance Premium

You can also claim a deduction on the premium paid towards medical plans under section 80D up to ₹50,000. However, the maximum deduction available to individuals on health insurance is up to ₹25,000. Thus, it is one of the major benefits you can get as a senior citizen.

Wrapping Up

Rules for income tax for senior citizens are a bit liberal. Tax benefits and rebates are provided, considering restricted sources of income after the age of 60. It helps them save their annual taxable income. Moreover, with a high percentage of senior citizens living on pensions, the government has made sure they are given a standard deduction on the annual tax for the same.