Special income tax benefit for senior citizens
The senior and super senior citizens enjoy a higher exemption limit for income tax as compared to tax payable individuals with lower age than senior citizens.
Post last updated: November 4, 2023
Special income tax benefit for senior citizens
To reduce the tax burden for senior citizens, government of India has given many relaxations for income tax to senior citizens and super senior citizens of India, the benefit for the same should be utilized diligently.
The benefit is provided in terms as the lump sum on the total limit for taxable income and for various sections of income tax for which the details would be described below, first let's get to some basic understanding.
Who would be considered senior citizen and super senior citizen of India?
A senior citizen is a person who is citizen of India and whose age on the last date of the previous financial year ie. 31 March is in between 60 to 80 years.
A senior citizen is citizen of India whose age is above 80 years as on 31 March on previous financial year.
Following are the benefits provided by the government for Senior and Super Senior citizens of India in tax and other provisions:
- Relatively Higher tax exemption Limit.
The senior and super senior citizens enjoy a higher exemption limit for income tax as compared to tax payable individuals with lower age than senior citizens.
The exemption is the minimum Annual income which is exempted from tax. For financial 2020-21 exemption limit for senior citizens is Rupees 300000/-, however for ordinary individuals the exemption limit is Rupees 250000/-, For super senior citizens the exemption limit is Rupees 500000.
This means that a senior citizen with income of 300000 and super senior citizen with income of 500000 do not need to pay any taxes as per income tax laws. The income over and above this income tax limit is eligible for tax.
- Benefit Under section 80D for income tax premium.
Section 80D is also included in Chapter IVA of income tax and the deductions allowed in this section are over and above section 80C limit of 150000/-.
This section provides an income tax deduction for the premium paid by the individual for self or family members, which may include Self, spouse or dependent children, in addition to that the deduction for parents which may be senior citizen or not senior citizen, premium paid for health insurance for them too is also allowed as deduction in this section. So if senior citizen is paying health insurance premium then he can have more benefit as per the data described in table below.
Premium paid for Health insurance for Total limit available for deduction
Self & family 25,000 Self & family + Parents (Not senior Citizen) 25,000(Self + family) + 25,000(Parents) = 50,000 Self & family + Parents (senior citizens) 25,000 (Self + family) + 30,000(Parents) = 55,000 Self (senior citizen) & family + Parents (senior citizens) 30,000(Self + family) + 30,000(Parents) = 60,000
- Relativity higher exemption for money fixed deposits
The senior and Super senior citizens enjoy relatively higher income tax exemption on the interest earned on money fixed deposits in banks and post offices. This exemption comes under section 80TTB for senior citizens and interest earned up to 50,000 is eligible for deduction under this section, it means the interest earned in a year till amount of Rupees. 50,000 is exempted from tax.
Moreover, there would be no TDS levied on FD in bank till the interest amount is 50000, for each bank individually, when the amount crossed 50,000 in each bank then bank can deduct the TDS for the amount above 50000.
Eg. If senior citizen has a fixed deposit of 10 Lac and he had earned a interest of 50000 on that amount in a year then there is not TDS deducted by the bank till 50000, if we assume the interest earned on FD to be 75000, then bank will deduct TDS on amount of 25000, for senior citizen and on 65000 for non-senior citizens which comes in section 80TTA for non-senior citizens.
- Benefit of income tax deduction for the treatment of specific diseases
Under section 80DDB there is a deduction to individuals for treatment of specific disease illnesses, following are the illnesses which are covered. The senior citizen can claim a deduction till 100,000 for expenditure of following diseases.
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Neurological Diseases (Mind related ailment) identified by a specialist, where the level of disability is certified to be 40% and above.
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Dementia
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Dystonia
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Musculo rum Deformans
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Chorea
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Motor Neuron Disease
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Ataxia, Aphasia
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Parkinson's Disease
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Hemiballismus
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Malignant Cancers
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AIDS- Acquired Immuno-Deficiency Syndrome
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Chronic Renal failure
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Hematological disorders like Hemophilia or Thalassemia (Blood related disorders).
- Standard deduction on Pension Income.
Senior citizens are given a privilege for a standard deduction for 50,000 on their pension income. This deduction is applied on the taxable income when calculated for an individual.
- Benefit to pay No Advance Tax.
The government of India has given a privilege to Senior and super senior citizens for not to pay advance tax event if the tax liability is more than 10000, unless the income is from business and profession, those Senior citizens who do not own any business need only to pay the self-assessment tax not the advance tax.
What is advance tax read more in the article on this web portal.
- Full tax exemption for reverse mortgage earning for Senior Citizens.
The reverse mortgaging seems to future for the elderly for monthly earning for the period they live. In reverse mortgaging, if the elderly owns a house then he or she can reverse mortgage their property to bank in lieu of monthly earnings, the bank can provide the monthly earning to elderly and allow them to live and provide the earning until they live, and take the possession of the house on demise of the elderly. The income tax laws provide full rebate of tax on this reverse mortgage earnings for senior citizens.
In the end I would like the readers, if they are respected Senior citizens of India to use these exemptions provided by the government and save the tax in this age group, as the income tend to reduce in this age and medical expenses tend to increase. So saving money from getting taxed using the above provisions provided by government becomes imperative.
The incometax calculator in Fincalci would help and suggest you to plan your tax labilities correctly and with no hassle.
