Happy Retirement: Your tax liability decreases as you grow older

One category of individuals who are smiling their way to bank is senior citizens.  Finance minister said that 3 is lucky number for him and he has showered triple bonanza for senior citizens. 

 

First of all, the age limit to qualify for senior citizenship has been reduced by 5 years from 65 to 60 years. The individuals who fall under this category will see their tax outgo reducing by Rs. 9,270 for male individuals and Rs. 6,180 for female individuals.

Secondly, the basic exemption limit is marginally enhanced from Rs. 2,40,000 to Rs. 2,50,000 leading to a tax saving of Rs. 1,030.

However, the main benefit to senior citizens comes once they reached 80 years of age.  Such individuals are classified as ‘Very Senior Citizens’ and for them the basic exemption limits have been hiked to Rs. 5,00,000.  This is more than double of the existing limits of Rs. 2,40,000 and will lead to substantial tax saving of Rs. 26,780.

The table below gives an overview of how the senior citizens have benefitted from the budget proposals.

Taxable Income	Males (aged 60 to 65 yrs)			Females (aged 60 to 65 yrs)
	Existing	Proposed	Savings	Existing	Proposed	Savings
5 Lakh	14,420	5,150	9,270	11,330	5,150	6,180
10 Lakh	35,020	25,750	9,270	31,930	25,750	6,180
15 Lakh	158,620	149,350	9,270	155,530	14,9350	6,180
20 Lakh	313,120	303,850	9,270	310,030	30,3850	6.180

Taxable Income	Senior Citizens (aged 60 yrs & above but less than 80 yrs)			Very Senior Citizens (aged 80 yrs and above)
	Existing	Proposed	Savings	Existing	Proposed	Savings
5 Lakh	26,780	25,750	1,030	26,780	NIL	26,780
10 Lakh	150,380	149,350	1,030	150,380	123,600	26,780
15 Lakh	304,880	303,850	1,030	304,880	278,100	26,780
20 Lakh	459,380	458,350	1,030	459,380	432,600	26,780

This article was also carried in Mumbai's edition of DNA of 1st March 2011.