Like all taxpayers, senior residents should additionally pay earnings tax on their earnings. Nevertheless, seniors are supplied further tax advantages to assist them take advantage of their earnings and investments.
After Funds 2020, particular person taxpayers, together with seniors, with no enterprise earnings can select between the previous tax regime and the brand new concessional regime. Listed below are three issues it’s best to know in regards to the earnings tax slabs for senior residents.
1. Previous & New Tax Slabs for Seniors
Senior and tremendous senior residents can now select between the previous and new tax regimes to cut back their tax liabilities. Whereas the relevant tax price is decrease within the new regime, a taxpayer should forgo nearly all of the deductions that may be claimed underneath the older regime.
Right here’s the previous tax regime for senior residents.
| Earnings Tax Slabs | Tax Price |
| As much as ₹ 3 lakhs | Nil |
| ₹ 3 lakhs to ₹ 5 lakhs | 5% |
| ₹ 5 lakhs to ₹ 10 lakhs | 20% |
| ₹ 10 lakhs and above | 30% |
The brand new tax regime is as follows-
| Earnings Tax Slabs | Tax Price |
| As much as ₹ 2.5 lakhs | Nil |
| ₹ 2.5 lakhs to ₹ 3 lakhs | 5% |
| ₹ 3 lakhs to ₹ 5 lakhs | 5% |
| ₹ 5 lakhs to ₹ 7.5 lakhs | 10% |
| ₹ 7.5 lakhs to ₹ 10 lakhs | 15% |
| ₹ 10 lakhs to ₹ 12.5 lakhs | 20% |
| ₹ 12.5 lakhs to ₹ 15 lakhs | 25% |
| ₹ 15 lakhs and above | 30% |
Well being and Schooling Cess @4% of earnings tax is relevant on each slab, besides the Nil slab with earnings of as much as ₹ 2.5 lakhs.
2. Previous & New Tax Slabs for Tremendous Senior Residents
Listed below are the tax slabs for tremendous seniors (above 80 years) as per the previous regime:
| Earnings Tax Slabs | Tax Price |
| As much as ₹ 5 lakhs | Nil |
| ₹ 5 lakhs to ₹ 10 lakhs | 20% |
| ₹ 10 lakhs and above | 30% |
The brand new tax slabs for tremendous seniors are as follows-
| Earnings Tax Slabs | Tax Price |
| As much as ₹ 2.5 lakhs | Nil |
| ₹ 2.5 lakhs to ₹ 5 lakhs | 5% |
| ₹ 5 lakhs to ₹ 7.5 lakhs | 10% |
| ₹ 7.5 lakhs to ₹ 10 lakhs | 15% |
| ₹ 10 lakhs to ₹ 12.5 lakhs | 20% |
| ₹ 12.5 lakhs to ₹ 15 lakhs | 25% |
| ₹ 15 lakhs and above | 30% |
Well being and Schooling Cess @4% of earnings tax is relevant on each slab, besides the Nil slab with earnings of as much as ₹ 2.5 lakhs.
3. Tax Deductions Accessible for Seniors
Listed below are among the earnings tax deductions solely accessible for senior residents.
- Customary deduction of as much as ₹ 50,000 in a monetary yr on pensions acquired via annuity funds.
- Deduction of as much as ₹ 50,000 in a monetary yr on premiums paid in direction of a medical health insurance coverage or medical bills underneath Part 80D of the Indian Earnings Tax Act. Dependent senior residents also can declare a deduction of as much as ₹ 1 lakh if affected by a crucial sickness underneath Part 80DDB.
- Deduction of as much as ₹ 50,000 on curiosity earnings earned from the put up workplace, financial savings account, fastened or recurring deposit underneath Part 80TTA.
Make investments Sensible to Increase Your Retirement Earnings
Merchandise like retirement plans and medical health insurance are a wonderful means for seniors to cut back their tax liabilities, whereas including extra safety and stability to their retirement life. Search for a reputed insurer to know extra in regards to the accessible merchandise and their tax advantages.
You may as well seek the advice of a tax advisor to know extra in regards to the tax slabs and resolve whether or not the previous or new tax regime might help you save extra.