Calculate Income Tax for Senior Citizen with Salary & Pension and Interest Income
I often get request to calculate income tax for readers and how they can save more tax! It’s not possible for me to calculate it for everyone. So going forward I would pick cases and show how to calculate income tax and if there is scope to save additional tax.
Below is the comment I received:
Dear Amit,
Pl calculate my income tax.
I would retire on 31 Jul 2019. My income from Apr 19 to Jul 19 is Rs. 2,50,000. Thereafter I would get pension @ Rs. 18,700 per month. As on 31 Mar 20 estimate interest on my FDs is Rs. 2,00,000. I have invested Rs. 2,00,000 in senior citizen scheme. Pl confirm how much income tax I have to Pay?
Download: Tax Planning Guide for FY 2019-20
As far as possible I would use the format used in filing income tax returns so that its more helpful for everyone.
We first calculate the total income for the financial year (FY 2019-20)
Total Income = Rs 7,49,600
The table below calculates the income tax:
| Header | Amount (RS.) | Remarks (FY 2019-20) |
| Income from Salary | 5,49,600 | Pension Income is considered as Salary Income |
| Income from Other Sources | 2,00,000 | Interest income is considered as income from other sources |
| Total Income | 7,49,600 | |
| Tax Saving/Exemption Sections | ||
| Standard Deduction | 50,000 | Applicable for Pension/Salary Income |
| Sec 80TTB (FD Interest Exemption) | 50,000 | Introduced in Budget 2018 for Senior Citizens |
| Senior Citizen Saving Scheme | 1,50,000 | Even if you invest Rs 2 Lakhs in SCSS the tax deduction would be limited to Rs 1.5 Lakhs only u/s 80C |
| Total Deduction | 2,50,000 | |
| Taxable Income | 4,99,600 | Total Income – Total Deduction |
| Tax Exemption Limit for Senior Citizens | 3,00,000 | |
| Net Taxable Income | 1,99,600 | Taxable Income – Exemption Limit |
| Tax @ 5% | 9,980 | The tax slab comes at 5% |
| Tax Rebate up to Rs 12,500 u/s 87A | -9,980 | The Taxable income is less than Rs 5 lakhs and hence eligible for Tax Refund u/s 87A |
| Net Income Tax | 0 | Tax – Tax Rebate |
| Health & Education Cess @ 4% | 0 | Cess increased to 4% in Budget 2018 |
| Total Income Tax Payable (including cess) | 0 | No Tax is Payable |
The total tax comes out to be NIL because of the increase in tax rebate u/s 87A and increase in Standard Deduction on Pension Income in Budget 2019. Additionally Section 80TTB (exemption up to Rs 50,000 on interest income) introduced in Budget 2018 helps further.
Also Read: 5 Key changes in Income Tax Rules from April 1, 2019 that you must Know
Disclaimer: The recommendation is made based on limited information we have!
As he pays NO tax there is nothing much to worry. He could use following tax benefits in case the income increases:
He is also eligible to submit Form 15H against his fixed deposits to prevent any TDS (Learn: How & when to Fill Form 15H?).
Also for senior citizens SCSS is one of the best investments for regular income. So he choose the right investment for tax saving.
Also Read: Best Tax Saving Investments u/s 80C
Let me know if this was helpful and you have any other suggestions!
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View Comments
The terminal benefits, such as Gratuity, Commutation of Pension and final Encashment of Earned leave, Leave on Private affairs, are totally / partially exempted from Income tax at the time of retirement of Central / State Government employees.
After retirement while getting pension amount, for Income Tax calculation, whether the take home pension, i.e. Basic Pension minus Commuted pension, be calculated (or) Basic pension be calculated?
This may please be clarrified.
Amitji,
Thanks for the great answer. However I feel that the questioner has not taken into account terminal benefits which he must have received during the period. Gratuity may be exempt from tax but leave encashment is not. Please clarify.
In Rule 64 of the Central Government Account Receipts and Payments Rules,1983 and also in Rule 217 of Central Treasury Rules it is clearly stipulated that the salary of March shall be paid on the first working day of April. As such for all purpose the salary of March in Government organizations is due and receivable/payable on or after 1st April.
Therefore, on accrual as well as cash basis, their salaries for the month of March is always assessable in the next Assessment Year only. For Tax calculations, Salary/Pension from MAR to FEB is counted.
For a super senior without health insurance coverage, can he avail Rs.30,000/- deduction U/s 80D towards annual Medical expenses besides standard deduction of 40,000 ?
Regarding the arrears paid for past years, and for claim relief U/s 89(i) this year, why should the government insist the seniors/ super senior pensioners to file the data and compute the Form 10E? Since it is a cumbersome process of searching for respective data in bank passbook, the pension disbursing banks can do it appropriately and apply TDS. For a salaried employee in service, the process is done by the Finance department but for pensioners, it is not easy. We have to wait for the disbursing bank to send us the year-wise breakup of arrears paid totally for 32 months.
If the Fin Min is considering to increase the 7th CPC factor from 2.57 to 3.68, then pensioners will get a lumpsum arrears this year for corresponding previous years. If so how to go about Form 10E calculation for the last 3 years?
Dear Amit,
I am NRI having both NRE and NRO accounts. I did not file IT return, although I would have got TDS reimbursements on my NRO account saving bank interest and FD interest, if I have filed
I received a compliant notice which had the following
1. Queries on my NRE account where FDs matured and I started a new FD after encashing. Why a query on NRE account is raised?
2. On my NRO account also, I did not renew a matured FD- Encashed it and opened a new FD. There are queries regarding the same - why
I replied through Compliance Portal and have not received any acknowledgment or reply - Can I assume that it is closed?
Please advise
Thanks,
Rajasekaran
Its always good practice to file your returns. So do so from this year. Why you got notice is because income tax department is actively sending notices to people who they think should have file their returns but have not done so.
My DOB is 10-05-1938, Can i be considered as super senior citizen for the FY 2018-2019 ( AY 2019-2020 )
Thanks
Yes.
Dear sir, Iam senior citizen I have made a fixed deposit in bank December 2018 the amount is 991000, yearly interest is 71000 and I have made a Pradhan mantri vaya Vandana scheme in Lic the amount is 1000000, the yearly pension earned in same scheme is 83000 Kindly calculate my tax. And also my interest and pension amount how much TDs ????
Dear sir,
I shall retire on 28/02/2019.my birth date is 09/02/1959.thus I want to know that what would be income tax calculation factor for me either general or senior citizen.please send me details.
Thanking.
Your,s faithfully
Jayprakash
Sir,
will I get relief from local travel expenses. if yes what is section?
Pl calculate my income tax.
I would retire on 31 December 2018. My income from Apr 18 to December 18 is Rs. 7,50,000. Thereafter I would get pension @ Rs. 15,000 per month. As on 31 Mar 19 estimate interest on my FDs is Rs. 1,20,000. I have invested Rs. 15,00,000 in senior citizen scheme. Pl confirm how much income tax I have to Pay?