Income Tax Slab Rates For Senior Citizens FY 2020-21

Senior citizen

Income tax slab rates for senior citizens

According to budget 2020,there is a big surprise in terms of revised tax slab rates for all tax payers.Let us discuss income tax slab rates for senior citizens FY 2020-21.

Budget 2020 changes

It is worth mentioning here that under new tax regime,the following tax slab rates are applicable for senior citizens  :

Tax slab ratesTax Rate
0-250,000Nil
250,001 to 5,00,0005%
5,00,001 to 750,00010%
750,001 to 10,00,00015%
10,00,001 to 12,50,00020%
12,50,001 to 15,00,00025%
Above 15,00,00030%

The new budget 2020 slab rates are subject to forego about 70 major tax exemptions and deductions.

So if senior citizens want to calculate their tax according to new tax slab rates for FY 2020-21

They can not claim about 70 deductions.But they have the option of choosing old tax regime (tax slab rates for FY 2019-20).

Comparison of new and old tax rates for Senior Citizens

Total Income
In FY 2020-21
New Tax regime
For Sen.Citizens
Age(>=60 &<80)
Total Income
In FY 2019-20
Old Tax Regime
For Sen.Citizens
Age(>=60 &<80)
0-250,000Nil0-3,00,000Nil
250,001-5,00,0005%
5,00,001-750,000
10%350,001-5,00,0005%
750,001-10,00,00015%
10,00,001-12,50,00020%5,00,001-10,00,00020%
12,50,001-15,00,00025%
AbOve 15,00,00030%Above 10,00,00030%

So from the table,it is clear that tax rates for senior class has  also been reduced but they will have to forgo all deductions like from 80C to 80U,standard deduction,housing loan etc.

Note : you can opt for new tax or old tax regime according to your need.

But some of the deductions are still applicable for senior citizens under new tax regime under budget 2020 :

  1. Section 10(6)- Remuneration received as an official of an Embassy, High Commission etc.
  2. Section 10(7)- Allowances or perquisites paid o outside India by the Government to an Indian citizen.
  3. Section 10(10)- Death–cum-retirement gratuity received.
  4. Section 10(10A)- Commuted value of pension received.
  5. Section 10(10AA)- Earned leave encashment on retirement.
  6. Section 10(10B)(i)- Retrenchment Compensation received in respect of schemes not approved.
  7.  Section 10(10B)(ii)- Retrenchment Compensation received in respect of approved scheme.
  8.  Section 10(10C)- Amount received or receivable on voluntary retirement or termination of service.
  9.  Section 10(10CC)- Tax paid by employer on non-monetary perquisite.
  10. Section 24- Interest on Home Loan on rented out properties only.
  11.  Section 80CCD(2)- Contribution of employer to pension scheme of Central Government (NPS and EPF)

Tax calculation for senior citizens under old tax regime

Suppose your gross pension for FY 2019-20 is 8 lakhs.

Deduct standard deduction of ₹ 50,000 and saving from 80C to 80U ( suppose it to be ₹ 150,000).

Also read : Latest income tax slab rates for govt employees FY 2020-21

Thus your taxable income becomes ₹ 6 lakhs.

So in case of taxable income being greater than 5 lakhs,there will be no tax rebate under section 87A.

Hence as per tax slab rates for senior citizens FY 2019-20 :

0-300,000 = nil tax.

300,001-500,000 = @5% of 200,000= ₹ 10,000.

500,001-600,000 = 20% of 100,000 = ₹ 20,000.

So your total tax is ₹ 30,000.

Now health and education cess  4% of  ₹ 30,000 = 1200.

Hence your total tax liability is ₹ 31,200.

Calculate Tax  for senior citizens under New tax regime

Suppose your gross pension for FY 2020-21 is 8 lakhs.

No standard deduction of ₹ 50,000 and saving from 80C to 80U are applicable.

Thus your taxable income remains ₹  8 lakhs.

So in case of taxable income being greater than 5 lakhs,there will be no tax rebate under section 87A.

Hence as per tax slab rates for senior citizens FY 2019-20 :

0-250,000 = nil tax.

250,001-500,000 = @5% of 250,000= ₹ 12,500.

500,001-750,000 = 10% of 250,000 = ₹ 25,000.

750,001-8,00,000 = 15% of 50,000 =₹ 7500

So your total tax is ₹ 45000.

Now health and education cess  4% of  ₹ 45,000 = 1800.

Hence your total tax liability is ₹ 46,800.

Which tax regime is better

It is really a bonus for all tax payers that if you are not satisfied with new tax regime, you  an opt for old tax rates,thus reduce your tax liability .

From the above two examples,it is crystal clear that there is a loss of ₹ 15600.

So you should follow the old tax regime.

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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