How To Calculate Income Tax for Senior Citizen Pensioners

Senior citizens (people aged 60 years or above) should understand the computation of income tax for senior citizens’ pensioners.

You can use various income tax calculators for senior citizens to calculate the income tax easily. However, it is also necessary to have a basic understanding of the tax calculation for senior citizens in India.

In this article, we will learn how to calculate income tax for senior citizens and pensioners.

How To Calculate Income Tax For Senior Citizen Pensioners?

1.     Determine the Pension Amount

First, to calculate the income tax for senior citizens, determine the total amount of pension received by the senior citizen during the financial year. If you are a senior citizen, you should already have the information with you.

2.     Add Other Income

If the senior citizen has any other sources of income, such as

• Income from investment,
• Interest income from fixed deposits
• Or rental income etc.

Then add all other income to calculate the total gross income of the senior citizen during a financial year.

3.     Apply Applicable Deductions

After that, look for the applicable senior citizen deductions under various sections of the Income Tax Act, such as Section 80C (for investments like EPF, PPF, etc.), Section 80D (for health insurance premiums) or Section 80G (for donations to specified funds).

Pensioners should keep track of their eligible deductions and maintain the necessary documentation to claim these benefits during the income tax filing process.

4.     Arrive at the Total Income

Subtract the eligible deductions from the total gross income to determine the senior citizen’s taxable income.

5.     Apply the Applicable Tax Slab Rates To Calculate Tax Liability

Next, apply the applicable tax slab rates to determine the tax rate applicable to the senior citizen’s total income to calculate the senior citizen’s income tax liability.

Tax Slabs and Rates For Senior Citizens

Here’s a table showcasing the tax slabs and rates for senior citizens above 60 but below 80 for the financial year 2022-2023 (the assessment year 2023-2024) in India:

Income Tax Slab for Super Senior Citizens

Here’s a table showcasing the new income tax slabs for super senior citizens (individuals aged 80 years or above) for the financial year 2022-2023 (the assessment year 2023-2024) in India:

6.     Surcharge and Cess

If applicable, look for the surcharge and cess per prevailing tax laws. Surcharge and cess are the additional charges imposed for a particular purpose based on the income level.

7.     Arrive at the Final Tax Payable

After adding the surcharge and cess (if applicable), you will arrive at the amount of the final tax payable by the senior citizen. If any of your earning sources is deducting TDS which is higher than your tax liability, you can claim an income tax refund.

Conclusion

Tax calculation for senior citizen pensioners involves several steps. However, these steps make it easy for the senior citizen to calculate the income tax and contribute towards the growth of the society.

It is also recommended to seek advice from the tax professionals to stay up to date with the latest law and optimise tax planning effectively.