As a retired senior citizen in India, navigating your taxes, especially with income from interest and capital gains, can feel like a maze. Let’s simplify how your tax would be calculated for the Financial Year 2024-25 (Assessment Year 2025-26), keeping your specific income in mind.
Your Income Breakdown
You’ve got a mix of income sources:
- Bank Interest: ₹2,00,000
- Short-Term Capital Gains (STCG): ₹1,50,000 (from listed equity shares/equity-oriented funds/REITs/InvITs where STT was paid, taxable under Section 111A)
- Long-Term Capital Gains (LTCG): ₹2,20,000 (from listed equity shares/equity-oriented funds/REITs/InvITs where STT was paid, taxable under Section 112A)
Understanding the Tax Regimes
For FY 2024-25, the new tax regime is the default. However, you can still opt for the old tax regime if it proves more beneficial.
- Old Tax Regime (for Senior Citizens aged 60-79): Your basic exemption limit is ₹3,00,000. This regime allows you to claim various deductions and exemptions (like those under Section 80C or 80D), though your income sources listed here don’t suggest many would apply.
- New Tax Regime: The basic exemption limit is also ₹3,00,000 for FY 2024-25. This regime doesn’t offer a higher exemption for senior citizens and generally restricts most deductions and exemptions.
Key Considerations for Your Tax Calculation
- Long-Term Capital Gains (LTCG) under Section 112A:
- Exemption: The first ₹1,25,000 of LTCG from listed equity shares, equity-oriented mutual funds, REITs, or InvITs (where STT is paid) is exempt from tax.
- Tax Rate: Since it’s July 2025, your capital assets were sold on or after July 23, 2024. Therefore, your LTCG exceeding the exemption limit will be taxed at 12.5%.
- Short-Term Capital Gains (STCG) under Section 111A:
- Tax Rate: As your capital assets were sold on or after July 23, 2024, your STCG will be taxed at 20%.
- Exemption Limit Adjustment: STCG under Section 111A typically can’t be set off against the basic exemption limit if other income exceeds it. However, if your “other income” (bank interest in your case) is less than the basic exemption limit, the unused portion of that limit can be used to reduce your STCG.
- Rebate under Section 87A:
- New Tax Regime: If your total income is up to ₹7,00,000, you’re eligible for a rebate of up to ₹25,000.
- Important Catch: This rebate cannot be used against tax on LTCG under Section 112A. While the law isn’t as clear for STCG under Section 111A, tax authorities have generally disallowed it. Claiming this rebate against STCG could lead to potential litigation.
Let’s Calculate Your Tax (Assuming New Tax Regime Chosen)
Given the current date, we’ll assume the capital assets were sold on or after July 23, 2024. The new tax regime is generally more straightforward without deductions.
1. Calculate Taxable Long-Term Capital Gains (LTCG):
- Total LTCG: ₹2,20,000
- Exempt LTCG: ₹1,25,000
- Taxable LTCG = ₹2,20,000 – ₹1,25,000 = ₹95,000
2. Utilize Basic Exemption Limit:
- Under the new tax regime for FY 2024-25, the basic exemption limit is ₹3,00,000.
- Your bank interest of ₹2,00,000 is fully covered by this limit.
- Unused basic exemption = ₹3,00,000 – ₹2,00,000 = ₹1,00,000
- This unused amount can first be used to set off your LTCG:
- LTCG after set-off = ₹95,000 – ₹95,000 = ₹0 (since your LTCG is less than the unused exemption)
- Remaining unused basic exemption = ₹1,00,000 – ₹95,000 = ₹5,000.
- This remaining ₹5,000 can then be used to set off your STCG:
- STCG after set-off = ₹1,50,000 – ₹5,000 = ₹1,45,000.
- Your final taxable STCG is ₹1,45,000.
3. Calculate Tax on Remaining Income:
- Tax on Bank Interest: ₹0 (fully covered by basic exemption).
- Tax on LTCG (Section 112A): ₹0 (as it was fully set off against the basic exemption).
- Tax on STCG (Section 111A):
- Taxable STCG: ₹1,45,000
- Tax Rate (assuming sale after July 23, 2024): 20%
- Tax on STCG = ₹1,45,000 * 20% = ₹29,000
Total Tax Before Cess and Rebate = ₹29,000
4. Consider Rebate under Section 87A:
Your total income for rebate eligibility is ₹2,00,000 (Bank Interest) + ₹1,50,000 (STCG) + ₹2,20,000 (LTCG) = ₹5,70,000. Since this is below ₹7,00,000, you are eligible for a rebate of up to ₹25,000.
Scenario A: If you claim rebate against STCG (potential for litigation)
If you were to claim the rebate against the tax on STCG:
- Tax on STCG: ₹29,000
- Less Rebate u/s 87A (max ₹25,000): -₹25,000
- Tax payable before cess: ₹4,000
- Add Health and Education Cess @ 4%: ₹4,000 * 4% = ₹160
- Estimated Total Tax Payable: ₹4,160
Scenario B: If you do NOT claim rebate against capital gains (safer approach)
Given the ambiguity and typical stance of tax authorities/utility, if you don’t claim the rebate against capital gains:
- Tax on STCG: ₹29,000
- Add Health and Education Cess @ 4%: ₹29,000 * 4% = ₹1,160
- Estimated Total Tax Payable: ₹30,160
Important Advice and Next Steps
- Compare Tax Regimes: Always compare the tax outcome under both the old and new tax regimes. While the new regime is often simpler, a detailed comparison can ensure you choose the one that saves you the most.
- ITR Form and Deadline: You’ll need to file ITR-2. The due date for filing your ITR for FY 2024-25 (AY 2025-26) is September 15, 2025.
- Professional Guidance: Tax laws, especially concerning capital gains and rebates, can be tricky. It’s highly recommended to consult a qualified Chartered Accountant (CA). They can provide personalized advice, help you navigate the complexities, ensure accurate calculations, and assist with filing your return to minimize any issues.
Do you have specific dates for your capital asset sales, or any other income sources or deductions you’re curious about?