Know all tax benefits available to your senior citizen parents

Know all tax benefits available to your senior citizen parents

Government has offered a wide array of tax benefits to senior citizens. They are entitled for tax exemptions. Also they are offered more benefits when it comes to tax reporting.

India has always been a society that has cared for and respected its elders. It is no surprise then that the government offers various tax benefits for the elderly so that they do not face any unnecessary financial burden in their sunset years. Here is a look at the various tax deductions on offer for them.

Who is a senior citizen?

As per the Indian IT Act, any individual who has attained the age of 60 years or above qualifies to be considered as a senior citizen. Earlier, the qualifying age was 65 years, but was reduced to 60 years from FY 2011-12. Those who are above 80 years of age are considered as very senior citizens.

Tax benefits for senior citizens

There are tax deductions on offer for senior citizens but the deductions are available only for resident Indian tax payers. If you are a non-resident Indian above the age of 60 years, the tax deductions will not be applicable in your case. Here is a look at various tax benefits available for resident Indian senior citizens.

Higher tax exemption limit: For all senior citizens above the age of 60 years, there is an additional tax exemption of Rs. 50,000. While normal citizens earning up to Rs. 2,50,000 are exempted from the tax payment, the limit is Rs. 3 Lakh for senior citizens. The exemption is further increased to Rs. 5 Lakh for very senior citizens who have attained the age of 80 and above.

Tax benefit for medical insurance under Section 80D:

Any payment made by a senior citizen towards health insurance premium gets tax exemption under section 80D of Income Tax Act 1961. As a senior citizen, you can avail a tax deduction of Rs. 30,000 from the assessment year 2016-17. If you are above 60 years of age and are also paying medical insurance premium for your parents above 60 years, you can get a combined tax deduction of Rs. 60,000.

Deductions for a specified disease under Section 80DDB: If you are a senior citizen and are suffering from a critical illness, you can avail a tax deduction of up to Rs. 60,000 under Section 80DDB. The deduction limit is increased to Rs. 80,000 if you come under the very senior citizen category. The disease you suffer from should be one among the listed ones or approved by the department. You will need to furnish a certificate from the hospital or from a medical specialist recognized by the Medical Council of India to be eligible for this deduction.

No advance tax payment:

Senior citizens who have any business income are exempted from filing any advance tax payment. Instead of advance tax, all you need is to pay a self-assessment tax on your overall income in the financial year.

Non-deduction of TDS on interest on FD:

If, as a senior citizen, your overall income is below the taxable limit, then you can make use of form 15H to instruct the banks to not deduct any TDS on the interest you earn on your fixed deposit investment. You will however need to submit form 15H every financial year to avoid TDS deduction.

No routine IT scrutiny:

Income tax scrutiny can drain the spirit of any regular taxpayer. To avoid the mental stress of your case coming up for IT scrutiny, the IT department has made it clear that routine scrutiny cases will not involve any senior citizens unless the department has real creditable information to initiate scrutiny proceedings.

E-filing not mandatory for very senior citizens:

Very senior citizens may not be comfortable with modern day technology and the IT department has granted a relaxation for all taxpayers who fall in the category for mandatory e-filing. Anyone who qualifies as a very senior citizen does not necessarily need to use the e-filing mode to opt for a refund claim and can make the request in a paper format.

No tax on reverse mortgage loan:

Reverse mortgage loans allow senior citizens above 60 years to receive a regular income by mortgaging a self-owned and self-occupied home. The money received through a reverse mortgage loan is not considered as income, and is free from any tax liability, making it an attractive option for senior citizens.

Senior citizens deserve financial freedom in their sunset years and hence the government offers various tax deductions to make their life easy.

Happy Investing

Source:Moneycontrol.com