Benefits for Senior Citizens Under Income Tax Act 1961- At a Glance

 

 

·         Senior Citizen must be of the age of 60 years or above but less than 80 years at any time during the respective year

·         Very Senior Citizen must be of the age of 80 years or above at any time during the respective year.

·         For ordinary individual tax payers, the basic limit for exemption, up to which he is not required to pay tax is presently Rs. 2,50,000 up to A.Y. 2021-22.

·         However, for Senior Citizens, the basic exemption limit is fixed at a higher figure of Rs. 3,00,000. For Very Senior Citizen do not have to pay tax up to Rs. 5,00,000 of Annual total income.

·         Deduction in respect of health insurance premium paid by an individual and HUF is deductible up Rs. 25,000 and additional deduction up to Rs.25,000 for the health insurance premium paid for parent or parents of the assessee is available.

·         Under above circumstances if an assessee is a Senior or Very Senior Citizen deduction will be available up to Rs.50,000. Please remember that for claiming this deduction the health insurance premium is paid by any mode other than cash.

·         Over and above any medical expenditure incurred on medical treatment of specified diseases. To claim the amount of expenditure the assessee is required to obtain the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as prescribed in the amended rule 11DD(2). Allowable amount is of Rs.1,00,000.

·         Individual tax payers, other than senior citizens are allowed maximum deduction of Rs. 10,000 u/s 80TTA in respect of interest income from saving bank account. However, from A.Y. 2019-20 onwards, a senior citizen are allowed the deduction up to Rs. 50,000 u/s 80TTB in respect of interest income earned not only on savings bank accounts but also on interest income earned on any bank deposits or any deposits with post office or co-operative Banks.

·         Section 194A of the Income Tax Act 1961 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.

·         As per section 208 every persons whose estimated tax liability for the year is Rs. 10,000 or more shall pay 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.

·         From A.Y. 2019-20, a standard deduction up to Rs. 40,000 against salary income earned during the year has been introduced u/s 16. Accordingly, a Senior Citizen who is in receipt of pension income from his former employer can claim up to Rs. 40,000 against such salary income. This limit is increased to ₹ 50,000 p.a. by Finance Act, 2019 [FY 2019-20, A/Y 2020-21].

·         Very Senior Citizen aged 80 years or more filling his return of income in Form SAHAJ (ITR-1) or SUGAM (ITR-4) and having total income of more than Rs, 5,00,000 or having a refund claim can file his return of income in paper mode. For such individuals, electronic filling of ITR 1 or ITR 4 (as the case may be) is not mandatory. However, he may opt or e – filling if he chooses to do so.

·         A senior citizen may submit form No 15H to the deductor for non deduction of TDS on certain incomes referred to in that section, if the tax on his/her estimated total income of the concerned year comes at nil.

·         The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain nor under any other head of income.