Is the Indian Tax System Good for Seniors? 

I frequently witness seniors around me visiting cybercafés and service centres to fill up their tax returns. While some of them are not comfortable with the online filing of tax returns, many want to skip this part and put the responsibility of filing tax returns on individuals running cyber cafés. Aversion to technology can be one part of the answer however, the primary reason remains the intricacies and complexities surrounding the Indian tax system, which most of them want to avoid.  

Since running away from filing taxes is not the best option in the twenty-first century, let’s get ourselves familiar with some schemes that seniors may avail themselves, to get tax benefits  

Who is a senior citizen as per the income tax act?   

Any person falling in the age group of 60-80 years is termed a senior citizen, while those above 80 years of age are categorised as ‘super-senior’.  

A person who has attained the age of 60 or above probably has a lot of experience in life, playing multiple roles for society. After seniors and super-seniors have served the country in numerous ways, the government tries to pay them back in the form of some tax benefits. 

Exclusive tax benefits for senior citizens  

• Higher Exemption Limit – It is the limit, up to which, a person is not required to pay income tax.  For normal taxpayers, this limit is 2.5 lakhs, whereas, for senior citizens, it is up to 3 lakhs.     
• Payment of Advance Tax – A senior citizen, who is not earning from any business, need not pay any advance tax.  
• Interests on deposit – Interest limit up to 50,000 Rupees on savings account and fixed deposit does not incite any tax. This limit is 10,000 for a person below 60 and only the saving account’s income is taken into consideration in their case.  
• Tax Deducted at Source (TDS) on Interest – If the bank interest is below 50,000 Rupees, there shall be no TDS for a senior citizen.   
• Medical Treatment of Specified Disease – There is a list of diseases like Dementia, Parkinson’s disease, malignant cancers, etc. for which senior citizens can deduct tax of up to 1 Lakh Rupees.    
• Medical insurance Premium – The amount of premium paid on medical insurance can be claimed for deduction under the income-tax act. For a normal taxpayer, this limit is 25,000 per year, while for a senior citizen, the limit exceeds up to 50,000 Rupees.   

Exclusive tax benefits for super senior citizens  

Both offline & online filing of income tax returns is available exclusively for super senior citizens.    

No income tax return filing for senior citizen   

This section has recently been introduced for people above 75 years. If a person has only two sources of income i.e. pension and interest, they are not required to file an income tax return. They have to submit a form to the bank declaring that they earn income from pension and interest only. Post this, the bank will file income tax returns on behalf of that person. 

The Indian taxation system has undergone several changes in the past few years. Recently, the government has introduced a new taxation system without substituting the older one. Simply put, the government now gives two choices to an individual for filing tax returns.   

From financial year (FY) 2020-21 and 2021-22, taxpayers can choose between two tax regimes – the existing or old tax regime and the new one. While the old tax regime, with higher income taxes, allows various exemptions; the new tax system, with lower income taxes, does not allow most of those exemptions.  

Income tax slabs for residential senior citizens for the fiscal year 2020-21 to 2021-22  

Income tax slabs and rates for residential super seniors for FY 2020-21 to 2021-22  

Seniors can compare both the tax regimes and choose which one suits them the best.  

Post-retirement life often comes with comparatively lesser income sources and fewer opportunities, but, with proper planning and savings, any individual can live a fulfilling life. If you are paying taxes even after the age of 60, consider yourself lucky since your income is high enough to fall in the tax bracket. Jokes apart, one must know that any individual can learn about tax structures and the outlines of the tax systems. A simplified tax slab structure with benefits is already presented to you. Next time, you file a tax return; do give a glance at the exclusive benefits reserved for you.    

Explore Other Schemes for Seniors Citizens

Frequently Asked Questions