Senior citizens are entitled to receive tax benefits under the Income-tax Act, 1961, which are unavailable to others. Senior citizens (60 years and above but less than 80) and super senior citizens (80 years and above) get special benefits under the income tax. For the financial year 2023-24, tax-saving investments should be made before March 31, 2024.The new tax regime does not offer tax benefits under Section 80C and other sections for medical insurance premiums, interest income, etc. However, the old tax regime still provides benefits under various sections. Let’s look at the tax slabs and benefits senior citizens can avail of.

Old Tax Regime (FY 2023-24):

Also Read: New Vs. Old Tax Regime, What Suits Best For A Retiree?

New Tax Regime (FY 2023-24):

Tax Benefits For Seniors

Higher Exemption Limit:

The basic exemption limit for senior citizens is Rs 3 lakh and for super seniors Rs 5 lakh in the old tax regime for FY 2023-24, whereas, in the new tax regime, it is Rs 3 lakh for all, irrespective of senior, super senior or non-senior citizen. The new tax regime is the default regime from April 1, 2023 (FY 2023-24), but individuals can switch to the old or new regime every year. If the income is less than Rs 7 lakh, individuals are not required to pay any tax in the new tax regime.

Health Insurance Benefit (Section 80D):

Under Section 80D, on payment of medical insurance premiums, an individual taxpayer can claim a tax deduction of Rs 25,000, but for seniors, the deduction is Rs 50,000 per year. However, note that the premiums should be paid through any mode other than cash to claim tax benefits. The new tax regime does not offer this benefit.

Allowance For Specified Disease Treatment (80DDB):

Seniors can also avail of tax deductions of up to Rs 1 lakh in a financial year to treat a critical disease under Section 80DDB. The benefit is the same for both senior and super seniors. Compared to this, others can get a tax benefit of Rs 40,000 in one year.

Also Read: Senior Citizen Tax Slabs: How Do They Differ In Old And New Regimes?

Interest Income Deduction (80TTB):

Senior citizens can avail themselves of tax deduction under section 80TTB on the interest income from bank deposits, co-operative society, post office, and other small saving schemes up to Rs 50,000 a year. This interest income includes income from all bank accounts, such as savings accounts and fixed deposits. If a senior earns an interest income of more than 50,000 in a year, the income above the limit becomes taxable for the account holder as per the tax slab. The deduction limit is Rs 40,000 for those less than 60 years old.

Standard Deduction:

Under the old and new tax regimes, the standard deduction of Rs 50,000 is allowed. The standard deduction applies to pensioners and family pensioners, with a ceiling of Rs 50,000 and Rs 15,000, respectively.

Advance Tax Payment:

Under Section 208 of the Income-tax Act, a person has to pay advance tax if their tax liability is more than Rs 10,000 in a financial year. However, for senior citizens, it is not mandatory. Seniors are not required to pay advance tax unless they have a taxable income under the income tax head ‘profit and gains from business or profession’.

ITR Filing (Section 194P):

Under Section 194P of the Income-tax Act, 1961, senior citizens aged 75 years and above are exempted from filing the income tax return (ITR) under certain conditions. These conditions are as follows: a person should be a resident in the previous year, be 75 years or older, and have income only from pension and interest (interest is earned from the same bank where the pension is received). In this case, a senior citizen must submit a declaration form to the specified bank. The bank deducts the TDS, and the senior need not file an ITR separately.