Exclusive Benefits Available To Senior Citizens In Income Tax.

Exclusive Benefits Available To Senior Citizens In Income Tax.

Income tax is levied on the income earned by all the individuals, HUF, partnership firms , LLPs and Corporates as per the Income tax Act of India. In the case of individuals, tax is levied as per the slab system if their income is above the minimum threshold limit (known as basic exemption limit).

These slab rates are different for different categories of taxpayers. Income tax has classified three categories of “individual “taxpayers such as:

Who is considered a senior citizen for Income Tax?

According to the Income Tax Act, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is Considered as a Super Senior Citizen for Income Tax?

An individual resident above the age of 80 years, as on the last day of the previous financial year is regarded as super senior citizen.

8 Exclusive Income Tax Benefits for Senior Citizens.

The Indian Income Tax Act gives certain tax benefits to senior citizens and tries to make the income tax e-filing process hassle free, they are as follows:

1. The Elementary Exemption Benefit:

Every individual in India who falls under the income brackets is allowed for some elementary waivers.

The exemption limits are as follows:

  • Regular citizen = ₹2,50,000 p.a. (age upto 59) 

  • Senior citizen = ₹3,00,000 p.a. (60+)

  • Super senior citizen = ₹5,00,000 p.a. (80+)

The exemption limit for tax filing for senior citizens in India is comparatively much more than an ordinary citizen.

2. Privilege on Interest Income:

The ordinary citizen who are residents of India will have to pay no tax on their interest earned up to Rs.40,000/- in a financial year.

While for senior citizens the limit is up to Rs.50,000/- in a financial year. 

U/s 80TTA of Income Tax Act, it will be considered as interest earned in the savings bank account, deposits in a bank, and/or deposits in post-office.

3. Benefits under Medical Insurance:

Under section 80D of Income Tax Act, an ordinary citizen can avail a deduction of Rs. 25,000/- on premium paid towards medical insurance for self, spouse, dependent parents and dependent children.

However, senior citizens can avail a deduction of Rs.50,000/- for the same.

For super senior citizens, under section 80 D, the deduction for the payment of medical premium as well as the actual expenses incurred on their treatment are allowed.

4. Allowance on the treatment of specified diseases:

Under section 80DDB of Income Tax Act, 1962, the deduction for an ordinary citizen availing medical treatment for specified disease/critical illness in a financial year is Rs.40,000/- or actual expenses, whichever is lower.

But for senior or super citizens the deduction is Rs.1,00,000/- or actual expenses, whichever is lower.

Age of the person who is availing medical treatment.

Amount of deduction (Rs.)

Age less than 60 years

Rs.40,000 or actual expenses, whichever is less

Senior Citizens- Age 60 years and above

Rs.1,00,000 or actual expenses, whichever is less

Very Senior Citizens- Age 80 years and above

Rs.1,00,000 or actual expenses, whichever is less

5. Offline Income Tax Return (ITR) filling: 

Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India. It contains information about the person's income and the taxes to be paid on it during the year. 

It is mandatory for all taxable persons to do e-filing of income tax. Super Senior Citizens (individuals above 80 years) can file for their Income Tax Return through either Sahaj (ITR 1) or Sugam (ITR 4). They can choose to do it either manually or electronically.

6. No Advance Tax Liability:

Advance tax is the amount of income tax that is paid much in advance rather than a lump-sum payment at the year-end. Also known as earn tax, advance tax is to be paid in installments as per the due dates decided by the income tax department.

Every ordinary citizen whose estimated tax liability for the year is Rs. 10,000/- or more is liable to pay advance tax. 

However, a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession is not liable to pay advance tax.

7. Standard Deductions from Pension Income:

Standard deduction means a flat deduction to individuals earning salary or pension income.

Retired senior citizen employees of Central and State Governments are also eligible for claiming standard deduction up to Rs. 50,000/- from their pension income.

8. No tax under the Reverse Mortgage Scheme:

Reverse mortgage is a loan which provides an additional source of income for senior citizens who have a self-acquired or self-occupied home in India. 

A senior citizen may reverse mortgage any of his accommodation to make monthly earnings. The ownership of the property remains with the senior citizen and they are given monthly payments for it. The amount paid in instalments to the owner is exempted from Income Tax.

9. Exemption from filing income tax returns (ITR):

In Budget 2021, the government announced that eligible senior citizens aged 75 and above will be exempted from filing income tax returns (ITR). However, it should be noted that this relaxation will come into effect only from FY 2021-22, i.e., for ITRs to be filed next year.

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