New Delhi: ITR Filing 2024 is in full swing and it is important that taxpayers make an informed decision while filing their taxes. Are senior citizens liable to pay income tax? Yes, they are required to pay tax on pension and retirement benefits under the Income Tax Act. However, while some retirement benefits are taxable, others are not! A senior citizen is not liable to pay taxes on 40 per cent of NPS corpus used to buy an annuity plan upon retirement. However, annuity pension is taxable. While PPF maturity amount and interest earned are completely tax-free, gratuity received upon retirement is tax exempted only up to Rs 20 lakh.
Tax on pension is levied according to the income tax slab of the senior citizen. No tax is levied on pension of up to Rs 3 lakh according to both the new and old tax regimes. On pension am ount exceeding Rs 3 lakh, a senior citizen is liable to pay taxes in under both tax regimes. Let’s see how much tax on pension is levied for people aged 60 years and above, according to both the old tax regime and the new tax regime.
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How much Income Tax on pension under new tax regime?
Under the new tax regime, income tax on pension is charged as follows:
No tax on pension up to Rs 3 lakh
5 per cent tax rate is levied on pension above Rs 3 lakh up to Rs 6 lakh
10 per cent rate is applicable on an pension of above Rs 6 lakh up to Rs 9 lakh
15 per cent tax rate is applicable on pension of above Rs 9 lakh up to Rs 12 lakh
20 per cent tax rate is applicable of pension above Rs 12 lakh up to Rs 15 lakh
30 per cent tax rate is applicable on pension exceeding Rs 15 lakh
Finance minister Nirmala Sitharaman announced in Budget 2023 that under the new tax regime, taxpayers with an income of up to Rs 7 lakh will not be charged any tax. With the standard deduction, the non-taxable income under the new tax regime is nearly RS 7.50 lakh.
Tax on pension according to old tax regime
No tax on pension up to Rs 3 lakh
5 per cent tax on pension above Rs 3 lakh up to Rs 5 lakh
20 per cent tax rate on pension above Rs 5 lakh up to Rs 10 lakh
30 per cent tax rate on pension above Rs 10 lakh
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Tax on pension according to both income tax systems
Tax Slabs As Per New Income Tax Regime
Tax Slabs as per Old Income Tax Regime:
Total Income (Rs)
Income Tax Rate (%)
Total Income (Rs)
Income Tax Rate (%)
Up To Rs 3,00,000
NIL
Up To Rs 3,00,000
NIL
Rs 3,00,001 – 6,00,000
5% above Rs 3,00,000
Rs 3,00,001- 5,00,000
5% above Rs 3,00,000
Rs 6,00,001 – 9,00,000
10% above Rs 6,00,000
Rs 5,00,001- 10,00,000
20% above Rs 5,00,000
Rs 9,00,001 -12,00,000
15% above Rs 9,00,000
Above Rs 10,00,000
30% above Rs 10,00,000
Rs 12,00,001 – 15,00,000
20% above Rs 12,00,000
Above Rs 15,00,000
30% above Rs 15,00,000
Under the Income Tax Act, pension is taxable under the head — income from salary of the ITR form. A senior citizen can use ITR forms I to IV for ITR filing 2024.
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ITR 2024: Should senior citizens pay income tax on pension and retirement benefits? IS PPF taxable or not? Know what is included and what is exempted from tax under the Income Tax Act. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today