alexa

Search in Indianmoney's WealthPedia

Home Articles Will New Tax Slabs Help Senior Citizens?

Will New Tax Slabs Help Senior Citizens?

IndianMoney.com Research Team | Posted On Wednesday, February 05,2020, 05:18 PM

5.0 / 5 based on 8 User Reviews

Will New Tax Slabs Help Senior Citizens?

 

 

The Finance Minister Nirmala Sitharaman introduced a new tax regime in the Union Budget 2020. This new tax regime taxes you at a lower rate; than the earlier tax regime. However, you will not be able to enjoy tax exemptions and popular tax deductions like Section 80C, Section 24 and even the HRA tax exemption, not to mention the Standard Deduction. Now to the big question? Will the new tax slabs help senior citizens?

Want to know more on Tax Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

Will New Tax Slabs Help Senior Citizens?

The new tax regime doesn’t offer a higher tax exemption to senior citizens. Under current income tax laws, senior and super senior citizens enjoy a basic threshold tax exemption limit of Rs 3 Lakhs for senior citizens and Rs 5 Lakhs for super-senior citizens.

See Also: Do You Really Save with the New Income Tax Slabs?

This itself was a sizeable tax exemption under the old regime. The new tax regime treats normal citizens, senior and super senior citizens equally. It’s up to senior citizens to decide if they benefit from the new income tax regime.

New Income Tax Slabs under Union Budget 2020

Income Tax Slabs

Old Tax Rates

New Tax Rates

Up to Rs 2.5 Lakhs

0

0

Rs 2.5 Lakhs to Rs 5 Lakhs

5*

5

Rs 5 Lakhs to Rs 7.5 Lakhs

20

10

Rs 7.5 Lakhs to Rs 10 Lakhs

20

15

Rs 10 Lakhs to Rs 12.5 Lakhs

30

20

Rs 12.5 Lakhs to Rs 15 Lakhs

30

25

Rs 15 Lakhs and above

30

30

If you do the calculations you will find a senior citizen has a specific tax deduction and tax exemption level which needs to be claimed so that tax payable in both regimes are the same. This is known as the breakeven tax deduction and tax exemption.

See Also: Calculate Income Tax Slabs With New Rules

Let’s say a senior citizen earns Rs 7.5 Lakhs. We will calculate income tax under the new income tax regime.  You will find that the senior citizens must pay Rs 39,000 under the new income tax regime.

Let’s take a look at the income tax slabs under the old regime:

Income Tax Slabs

Tax Rate for Senior citizens aged 60 Years But Less than 80 Years

Income up to Rs 3,00,000

No tax

Income from Rs 3,00,000 – Rs 5,00,000

5%

Income from Rs 5,00,000 – 10,00,000

20%

Income more than Rs 10,00,000

30%

You will find that the senior citizens must pay Rs 62,400 under the older income tax regime. So, without tax deductions and tax exemptions the new tax regime is better than the older tax regime.  Now, if the senior citizen avails tax deductions and exemptions up to Rs 1,12,500, you will find tax liability the same in both cases. 

Conclusion: If a senior citizen is able to avail tax deductions and tax exemptions up to Rs 1,12,500 or more, it’s better to stick to the older tax regime. If not, it’s better to shift to the newer tax regime.

Let’s say a senior citizen earns Rs 10 Lakhs. We will calculate income tax under the new income tax regime.  You will find that the senior citizens must pay Rs 78,000 under the new income tax regime. Now, if the senior citizen avails tax deductions and exemptions up to Rs 1,75,000; you will find tax liability the same in both cases.

See Also: New Income Tax Regime vs Old: Which is Better?

Conclusion: If a senior citizen is able to avail tax deductions and tax exemptions up to Rs 1,75,000 or more, it’s better to stick to the older tax regime. If not, it’s better to shift to the newer tax regime.

Let’s say a senior citizen earns Rs 12.5 Lakhs. We will calculate income tax under the new income tax regime. You will find that the senior citizens must pay Rs 1,30,000 under the new income tax regime. Now, if the senior citizen avails tax deductions and exemptions up to Rs 2 Lakhs you will find tax liability the same in both cases.        

Conclusion: If a senior citizen is able to avail tax deductions and tax exemptions up to Rs 2,00,000 or more, it’s better to stick to the older tax regime. If not it’s better to shift to the newer tax regime.

Let’s say a senior citizen earns Rs 15 Lakhs. We will calculate income tax under the new income tax regime. You will find that the senior citizens must pay Rs 1,95,000 under the new income tax regime. Now, if the senior citizen avails tax deductions and exemptions up to Rs 2,41,667 you will find tax liability the same in both cases. 

You May Also Watch

Iframe Content

Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.

Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.

Be Wise, Get Rich.

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
CIBIL Meter
Get It now!
Attention!

This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.