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Income Tax Slabs and Deductions for a Senior Citizen in 2012-2013

IndianMoney.com Research Team | Updated On Monday, November 17,2014, 02:46 PM
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Income Tax Slabs and Deductions for a Senior Citizen in 2012-2013

Here we have the famous saying "Everything We Have Is Taxed Including Our Patience". Oh why do we all have to pay taxes? Isn’t there a way we can save on these Taxes? Here we have the famous saying “Where There Is A Will There Is A Way”. Here in India the Government has provided us a way to save on our Income Tax by making use of the tax deductions available to us. .Mustn’t We Make Use Of This Splendid Opportunity Available To Us? I would like to remind all of you that the team of Financial Planners at IndianMoney.com are always there for you to plan your Tax Planning needs in a most effective and efficient manner. You can explore this unique Free Advisory Service just by giving a missed call on 022 6181 6111.

Let us consider the case of Mr Naveen a 65 year old Elderly citizen. He earns 14 Lakhs per annum working as a manager in a retail firm. Mr Naveen is very frugal and not only pays his taxes on time but also studies all available tax deductions which apply to him. The Income Tax Slab Shown below is the one which concerns him. In order to solve our Taxation queries we can look up the website IndianMoney.com.

Income Tax Slab Rates for Male/Females Between 60-80 Years FY-2012-2013 :

Income

Tax Rate

Upto Rs 2.5 Lakhs

NIL

> INR 2.5 Lakhs - INR 5 Lakhs

10%

INR 5 Lakhs - INR 10 Lakhs

20%

INR 10 Lakhs

30%

Here Had Mr Naveen Not Been Using His Income Tax Deductions These Would Have Been The Rates Which Would Have Applied To Him :

Table - 1

Heads

% of Income Tax

Income Tax

Up To INR 2.5  Lakhs

NIL

NIL

INR 2.5 Lakhs - INR 5 Lakhs
Here we a range of 250000 To 500000
which gives us 250000
(500000-250000)
We then calculate 10% of 250000

10%

INR 25000 (a)

INR 5 Lakhs-INR 10 Lakhs
Here we a range of 500000 To 1000000
which gives us 500000
(1000000-500000)
We then calculate 20% of  500000

20%

INR 100000 (b)

>INR 10 Lakhs
Here Mr Naveen earns 1400000
Here we have a range of 1000000 to 1400000 which gives us 400000
We then calculate 30% of 400000

30%

INR 120000 (c)

Total

 

INR 245000
(d)=(a)+(b)+(c)

Educational Cess

3% of total tax
(245000*3%)

INR 7350 (e)

Net Tax Payable

 

INR 252350
(f)=(d)+(e)

Here this would be the Income Tax Rate payable by Mr Naveen had he not used his Income Tax Deductions.

Here Mr Naveen invests a sum of INR 100000 towards Senior Citizens Saving Schemes. This is tax deductible under Section 80C.

Senior Citizens Saving Scheme Under Section 80C :

  • Senior Citizens Saving Scheme is the most lucrative scheme among all small saving schemes and is meant only for senior citizens. Interest income is tax chargeable.
  • Current rate of interest is 9% per annum payable quarterly.

Here Mr Naveen undergoes treatment for a disease and claims INR 60000 as tax deductions under Section 80DDB.

Tax Deductions Under Section 80DDB :

  • Here we have deductions of INR 40000 or the amount actually paid, whichever is lesser for the treatment of a disease or an ailment of the tax payer or a dependent relative .Here the deductions will be reduced by an amount received under insurance of an insurer or if he is reimbursed by the employer. If he is a senior citizen then INR 60000 or the actual expenditure whichever is less.

Here Mr Naveen suffers from a minor physical disability and avails tax deductions of INR 50000.

Tax Deductions Under Section 80 U:

  • Deductions of INR 50000 to an individual who suffers from a physical disability including blindness or mental retardation. If an individual has severe disability deductions of INR 1 Lakh are available.

Table - 2

Heads

Amounts

Gross Taxable Income

INR 14,00,000 (a)

Less Senior Citizens Saving
Schemes Under Section 80 C

INR 1,00,000 (b)

Less Tax Deductions Under
Section 80DDB

INR 60,000 (c)

Less Tax Deductions
Under Section 80 U

INR 50,000 (d)
(e) = (b)+(c)+(d)=210000

Total Taxable Income

INR 11,90,000
(f)=(a)-(e)

Table - 3

Heads

% of Income Tax

Income Tax

Up To INR 2.5 Lakh

NIL

NIL

> INR 2.5 Lakhs - INR 5 Lakhs
Here we a range of 250000 to 500000
which gives us 250000
(500000-250000)
We then calculate 10% of 250000

10%

INR 25000 (a)

> INR 5 Lakhs – INR 10 Lakhs
Here we a range of 500000 to 1000000
(1000000-500000)
We then calculate 20% of 500000

20%

INR 100000 (b)

INR 10 Lakhs
Here Mr Naveen has to pay his tax on
190000 @ 30%
(1190000-1000000)=190000

30%

INR 57000 (c)

Total Tax

 

INR 182000
(d)=(a)+(b)+(c)

Education Cess

3% on Total Tax
182000 @ 3%

INR 5460 (e)

Net Tax Payable

 

INR 187460 (d)+(e)

  • Here we have Net Income Tax Payable INR 252350 (TABLE -1) where Mr Naveen has not done any tax deductions as per the various tax deduction instruments available to him.
  • Here we have Net Tax Payable INR 187460 (TABLE - 3) where we calculate the amount. Mr Naveen has saved when he made use of the tax saving instruments available to him.
  • Here the difference between TABLE 3 and TABLE 1 is the yearly amount Mr Naveen has saved on tax by making use of tax saving instruments available to him.This translates to a sum of INR 64890.

Here we have seen how Prudence, Financial Discipline, Frugality and other qualities have helped Mr Naveen save on his taxes. Don’t you think we all need to inculcate these qualities in us so that they help us not only in saving our taxes but also in our day to day activities . I would like to end this article with the famous quote: "When There Is Income Tax The Just Will Pay More And The Unjust Less".

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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