Are you a senior citizen? Know the special tax benefits you can avail in India

Are you a senior citizen? Know the special tax benefits you can avail in India

 

A person is considered to be a senior citizen under the Income Tax Act on attaining the age of 60 in a financial year, even if for one day. Once he attains 60 years, his status as senior citizen in that financial year, gives him some relief. There are a few income tax exemptions available for senior citizens.

These are listed below:

Higher exemption limit

Exemption limit is the quantum of income up to which a person is not liable to pay tax. A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2019-20 available to a resident senior citizen is Rs 3,00,000. The exemption limit for non-senior citizen is Rs 2,50,000.

A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2019-20 available to a resident very senior citizen is Rs 5,00,000.

Tax benefits on medical insurance

A senior citizen can avail of higher of higher deduction of Rs 50,000 under Section 80D in respect of medical insurance premium for FY 2019-20. Further, senior citizen can claim deduction of Rs 50,000 in aggregate in respect of medical expenditure incurred on the health of assessee, himself, his/her spouse or dependent children or parents. This deduction is available if amount is paid for benefit of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Generally this deduction is available up to Rs 40,000 . However, if the patient is a senior citizen, then deduction of Rs 1,00,000 is allowable.

Deduction under Section 80TTB

Section 80TTB allows tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount up to Rs 50,000 earned by the senior citizen. Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.

Relief from TDS

Section 194Agives corresponding provisions that no tax shall be deducted at source from payment of interest to a senior citizen up to Rs 50,000.

As per Section 208, every person whose estimated tax liability for the year is Rs 10,000 or more, shall pay his tax in advance, in the form of "advance tax". However, Section 207 gives relief from payment of advance tax to a resident senior citizen. As per Section 207, from 2012-13, resident senior citizens, not having any income chargeable under the head "profits and gains of business or profession", shall not be liable to pay advance tax and such senior citizen shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax.

Senior citizens receive a higher interest (up to 50 bps) on a 5-year fixed deposit, which is eligible for deduction from the total income under Section 80C. Senior citizens can claim exemption on TDS on interest income earned on deposits. It can be done by submitting Form 15H under Section 197.

Happy Investing

Source: Taxguru.com