In this article I am discussing
about Income Tax Benefits Available to
Senior Citizens in India. A person becomes senior citizen under Income Tax Act
in any year after attaining the age of 60 even for one day. Once he attains 60
years, his status as senior citizen in that financial year, gives him some
relief. There are not many income tax exemptions available for senior citizens.
These are listed below:
1. Higher
Exemption Limit for Senior Citizens
From F.Y.
2011-12 Qualifying age for Senior Citizens has been reduced from 65 years
to 60 years and from A.Y. 2015-16 exemption limit for Senior Citizens has been
enhanced from Rs. 2,50,000 to Rs. 3,00,000. A new category of Very Senior
Citizens, 80 years and above, has been created who will be eligible for a
higher exemption limit of Rs. 5,00,000. Senior citizen
above the age of 80 years are entitled to higher exemption Limit of Rs.
5,00,000 from A.Y. 2012-13.
Senior citizens and
a very senior citizen are granted a higher exemption limit as compared to
normal tax payers. Exemption limit is the quantum of income up to which a
person is not liable to pay tax.
The exemption limit
granted to senior citizen and very senior citizen for the financial year
2020-21 is as follows :
|
Senior citizen |
Very senior citizen |
|
A senior citizen is
granted a higher exemption limit compared to non-senior citizens. The
exemption limit for the financial year 2020-21 available to a resident senior
citizen is Rs. 3,00,000. The exemption limit for non-senior citizen is Rs.
2,50,000. Thus, it can be observed that an additional benefit of Rs. 50,000
in the form of higher exemption limit is available to a resident senior
citizen as compared to normal tax payers. |
A very senior
citizen is granted a higher exemption limit compared to others. The exemption
limit for the financial year 2020-21 available to a resident very senior
citizen is Rs. 5,00,000. The exemption limit for non-senior citizen is Rs.
2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000
in the form of higher exemption limit is available to a resident very senior
citizen as compared to normal tax payers. |
2. Reverse mortgage
for senior citizens
Reverse mortgage’ – a
concept introduced by Finance 2007 -provides
that a senior citizen will be able to avail of monthly income streams by
mortgaging a house owned by him. For more details read the following
article :- Reverse mortgage created under a scheme made and notified by
the Central Government shall not be regarded as a transfer U/s. 2(47)
3. Tax benefits on medical insurance hiked for Senior
Citizens
a. A senior citizen can
avail of higher of higher deduction of Rs 50,000 u/s Section
80D in respect of medical insurance
premium for Financial Year 2019-20.
b. Further Senior
Citizen can claim deduction of Rs 50,000 in aggregate in respect of medical
expenditure incurred on the health of assesses, 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.]
Aggregate deduction on
a. or b. above cannot exceed Rs. 50000.
4. Deduction under
Section 80TTB
Section 80TTB of the
Income Tax law gives provisions relating to tax benefits available on account
of interest income from deposits with banks or post office or co-operative
banks of an amount upto Rs. 50,000 earned by the senior citizen (i.e., an individual
of the age of 60 years or above). Interest earned on saving deposits and fixed
deposit, both shall be eligible for deduction under this provision.
5. Relief from TDS
under Section 194A
Section 194A of the
Income Tax law gives corresponding provisions that no tax shall be deducted at
source from payment of interest by bank or post-office or co-operative bank to
a senior citizen up to Rs. 50,000. Therefor limit is to be computed for every bank
individually.
6. Higher Deduction
u/s 80DDB for Senior Citizens and Super Senior Citizens
Section 80DDB provides
deduction to an assessee in case of expense on medical treatment of
specified ailments. Generally this deduction is available upto Rs 40,000.
However , if the patient is a senior citizen, then deduction of Rs 1,00,000 is
allowable. Section 80DDB– Limit raised & waived condition of certificate
7. Senior Citizens not having Business Income Exempt From
Advance tax payment :–
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 (i.e., an
individual of the age of 60 years or above during the relevant financial
year). As per section 207 From Financial year 2012-13 resident
senior citizen, 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.
8. 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.
9. Senior citizens can claim exemption on
the tax deducted at source (TDS) on interest income earned on deposits. It can
be done by submitting Form 15H under Section 197 of the IT Act.
10. Exemption
from e-filing of income tax return to very senior citizen
Income-tax Act, 1961
provides no exemption to senior citizen or very senior citizen from filing of
return of income. However, to provide relief to the senior citizens (whose age
is 75 years or more) and to reduce the compliance burden on them, the Finance
Act, 2021, has inserted a new Section 194P.
This provision
requires a banking company to deduct tax under this provision if deductee is
maintaining an account with it in which he is receiving his pension income. The
tax is required to be deducted under this new provision if the recipient is a
resident individual whose age is 75 years or more at any time during the year and
the following conditions are fulfilled:
a) Total Income of the
deductee consists only income in the nature of pension and interest received or
receivable from any account maintained with deductor (such bank); and
b) Deductee has
furnished a declaration to deductor containing prescribed particulars.
If the above
conditions are satisfied, the deductor shall compute the income of deductee
after giving effect to the deduction allowable under Chapter VI-A and rebate
under Section 87A. Tax on such income is required to be deducted on the basis
of rates in force.
If tax is deducted
from the income of such senior-citizen, he shall
not be liable to furnish the return of income for the previous year in
which tax has been deducted.
Thing to Note
At what age a person will
qualify as a senior citizen and very senior citizen under the Income-tax Law?
Before understanding
the age criteria, it is very important to know that the tax benefits offered
under the Income-tax Law to a senior citizen/very senior citizen are available
only to resident senior citizen and resident very senior citizens. In other
words, these benefits are not available to a non-resident even though he may be
of higher age. The age and other criteria to qualify as a senior citizen and
very senior citizen under the Income-tax Law are as follows :
|
Criteria for senior
citizen |
Criteria for very
senior citizen |
|
Must be of the age of 60 years or
above but less than 80 year at any time during the respective year. |
Must be of the age of 80 years or
above at any time during the respective year. |
|
Must be resident |
Must be resident |
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