The Income Tax Department provides additional tax relief to senior citizens aged 60 and above who report income in a financial year. Taxpayers above 80 are considered super senior citizens and are also eligible for relief in the form of a higher income exemption limit and waiver of income tax return (ITR) filing. For the assessment year 2023-24, tax-saving investments made by March 31, 2024, will be considered for ITR, whose last date is July 31, 2024. Those who miss the deadline can file their ITR by December 31, 2024, after paying a penalty of Rs 5,000.

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Here are a few things to know before filing your ITR

Deductions and Exemptions

Senior citizens have higher deduction and exemption limits compared to other taxpayers. Hence, they should consider them when calculating their taxable income. Additional deductions are available under Section 80D, Section 80TTB, apart from standard deductions under section 80C for investments in various tax-saving instruments such as life and term insurance policies, Senior Citizens Savings Scheme (SCSS), etc.

Calculating Taxable Income

To calculate the taxable amount, subtract eligible exemptions and deductions from total income. For instance, if a senior citizen’s annual earning is Rs 10 lakh, the basic exemption limit will be Rs 3 lakh, and with a standard deduction of Rs 50,000, the taxable income will be Rs 6.5 lakh.

Basic Exemption Limit

Senior citizens (60 and above) and super senior citizens (80 and above) have higher basic exemption limits of Rs 3 lakh and Rs 5 lakh, respectively.

Rebate

Section 87A allows senior citizens to receive a rebate if their total income reaches a specified limit (Rs 5 lakh under the old tax regime and Rs 7 lakh under the new tax regime).

Surcharge and Health and Education Cess

The final tax liability will include a surcharge and a 4 per cent health and education cess, and any interest consequences or late filing fees will be added to the total amount.

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Pension Taxability

Government pensions are exempt from tax. However, uncommuted pension income is taxable under the “Salaries” head and subject to marginal slab rates. Likewise, pensions from private-sector companies are taxable under the “Salaries” head and subject to tax rates. However, an exemption under section 10(10A) is provided, up to one-third of the commuted pension amount, if the employee is also in receipt of gratuity. If the employee has not received any gratuity income, half of the commuted pension amount is eligible for exemption.

Tax Benefits On NPS

The old tax regime allows deductions and exemptions for pension income. Individuals can derive tax benefits from NPS, including tax exemption up to 25 per cent of self-contribution on partial withdrawal and tax exemptions on lumpsum withdrawal up to 60 per cent of the accumulated pension wealth upon reaching 60 or superannuation under section 10(12A). These benefits are subject to certain terms and conditions specified by the Pension Fund Regulatory Development Authority (PFRDA) under section 10(12B).