The basic salary, fixed allowances, house rent allowance, and other sources of income form the basis for calculating a senior citizen’s income tax. The tax calculating procedure for senior citizens is similar to the process applicable for individuals under 60 years.
However, it must be noted that a higher exemption limit is applicable for senior citizens as compared to those aged lower than 60 years.
Income tax for pensioners or senior citizens is levied on every source of income. This includes pension, fixed deposits, post office schemes, rental income, interest or earnings from savings schemes, or reverse mortgage. During the calculation of tax for senior citizens, gratuity and retirement benefits should be excluded.
For calculating a senior citizen’s income tax, the entire income is considered along with the new income tax slab for senior citizens for FY 2020-21 and allowable deductions. An income tax calculator can prove to be a handy tool for determining taxable income. For knowing one’s approximate tax liability, the following details must be entered:
- Assessment year for which a senior citizen is willing to calculate income tax
- Residential status, type of taxpayer
- Standard deductions
- Education cess according to the income tax slab applicable for senior citizens
- Surcharge (if applicable)
- Total tax liability
- Due date of submission of income tax return (ITR)
- Income from salary
- Income from house property (if applicable)
- Income and capital gains from other sources
- Gains or profit from any profession or business
- Agricultural income (if applicable)
- Completion of assessment for income tax return
- TCS or TDS (if applicable)