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Six Special Income Tax Benefits For Senior And Super Senior Citizens

Senior citizens and super senior citizens have some special income tax benefits available to them under the Income Tax-act, 1961.

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Versha jain
May 30, 2023
Capital Gains Tax

Capital Gains Tax

People aged 60 and above get special income tax benefits under the Income Tax-act, 1961. The following are some of the benefits.

Higher Basic Exemption Limit

The basis exempted income limit for senior citizens is Rs. 3 lakh; for super senior citizens, 80 and above, Rs. 5 lakh. For others, it is Rs. 2.5 lakh.

Seniors need not pay the same amount of taxes as other citizens. The exempted limit is applicable only in the old tax regime.

Higher Medical Insurance Limit 

Under section 80D of the Income-tax Act, seniors can claim a deduction of up to Rs. 50,000 on paying medical insurance premiums. For others, it is Rs. 25,000.

Abhishek Rana, a chartered accountant with AAAR & Associates, says, “Senior citizens have the privilege to claim a deduction of their medical expenditure up to Rs. 50,000/- each year u/s 80D of the Income Tax Act, provided the payments are made by any mode other than cash.”

Seniors also get a tax benefit of up to Rs. 1 lakh in a financial year for treating critical diseases under section 80DDB. For others, the limit is Rs. 40,000 per year.

Advance Tax

Section 208 of the Income-tax Act says that if a person has a tax liability of more than Rs. 10,000, they must pay the tax in advance.

However, resident senior citizens are not required to pay advance tax unless they have income from a business or profession.

Says Rana, “Senior citizens are exempted from payment of advance tax, as per the provisions of section 207 of Income Tax Act, if they are resident in India and do not have any income which is chargeable to tax under the head ‘profit and gains from business or profession.”

Higher Exemption On Interest Income

Interest earned from bank deposits, post offices or cooperative banks is exempted from tax under section 80TTB of the Income-tax Act 1961 for senior citizens. The exemption applies to all deposits, including savings and fixed deposits. However, above Rs 50,000 is taxable as per their tax slabs.

No TDS Deduction

A senior citizen who doesn’t fall in the taxable income category can submit Form 15H for no tax deduction at source (TDS) on the interest income on fixed deposits. Nonetheless, TDS is not deducted on interest payments up to Rs 50,000 by banks, post offices, or cooperative banks for senior citizens.

The exemption is calculated individually for every bank. TDS does not accrue up to Rs 10,000 interest income on the saving account.

Income Tax Return Benefits

Those 75 years and above can choose not to file income tax returns under section 194P of the Income-tax Act 1961 under certain conditions. However, this benefit applies to resident Indians with only pension and interest income credited to the same bank account.

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