Special income tax benefits for senior citizens — Here’s the list | Personal Finance News

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New Delhi: The senior citizens and very senior citizens get special income tax benefits from the Income-tax Department and are also granted a higher exemption limit as compared to the normal taxpayer. 

This is to be noted that an exemption limit is a quantum of income up to which a person is not liable to pay tax and that the tax benefits offered under the Income-tax Law to a senior citizen and a very senior citizen are available only to resident senior citizen and resident very senior citizens. These benefits are not available to a non-resident even though he may be of higher age. 

Criteria for senior citizen: Must be of the age of 60 years or above but less than 80 years at any time during the respective year and must be a resident.

Criteria for very senior citizen: Must be of the age of 80 years or above at any time during the respective year and must be a resident.

The following are the benefits that senior citizens and very senior citizens enjoy:

Benefits available to a senior citizen and very senior citizen in respect of tax rates

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, while the exemption limit for a 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 taxpayers.

Very senior citizen: A very senior citizen is granted a higher exemption limit compared to others as the exemption limit for the financial year 2020-21 available to a resident very senior citizen is Rs 5,00,000, whereas, the exemption limit for a non-senior citizen is Rs 2,50,000. This means that there is an additional benefit of Rs 2,50,000 in the form of higher exemption limit for a resident very senior citizen as compared to normal taxpayers.
 

Also read | ITR filing 2019-2020: File your income tax online in just few simple steps

 

Very senior citizen is granted exemption from e-filing of income tax return: From Assessment year 2019-20 onwards, a very senior citizen filing his return of income in Form ITR 1/4 can file his return of income in paper mode. For him, e filing of ITR 1/4 (as the case may be) is not mandatory and he may also go for e-filing as per his wish.

Resident senior citizen is granted exemption from payment of advance tax: The section 208 says that every person whose estimated tax liability for the year is Rs 10,000 or more, can 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​, a resident senior citizen not having any income from business or profession is not liable to pay advance tax.

Benefits available in respect of interest on deposits in case of senior citizens: According to the Section 80 TTB ​of the Income Tax law, provisions relating to tax benefits are available 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. The interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision. Notably, the ​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 a co-operative bank to a senior citizen up to Rs 50,000. Therefore, the limit is to be computed for every bank individually.
 

Also read | Income Tax refunds worth Rs 1.18 lakh cr issued to 33.54 lakh taxpayers till September 29

 
Benefits available in respect of expenditure incurred on account of medical treatment of specified diseases on treatment of a senior citizen: The Section 80D​DB of the Income-tax Law gives various provisions relating to tax benefits available on account of expenditure on medical treatment of specified diseases. 

Benefits available in respect of expenditure incurred on account of medical insurance premium or medical expenditure to a senior citizen: ​The Section 80D of the Income-tax Law gives various provisions relating to tax benefits available on account of payment of medical insurance premium and other related items.
 

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