Income Tax, a Boon for Senior Citizens

Last Updated On: Oct. 22, 2020, 8:31 p.m.
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INCOME TAX, A BOON FOR SENIOR CITIZEN

 

INTRODUCTION:

According to the Income Tax Act, a person becomes a Senior Citizen in any year after attaining the age of 60 years even for one day. Once a person attains 60 years, his/her status turns out to be a Senior Citizen in that financial year.

 

In this article, details of exemption available for Senior Citizens and the Tax benefits are listed.

1.Benefits on medical insurance hiked for Senior Citizens:

a.In respect to the medical Insurance premium for Financial Year 2019-20, A senior citizen can avail of a higher deduction of Rs 50,000 u/s Section 80D 

b. Any medical expenditure incurred on the health of assessee himself, his/her spouse, or dependent children or parents, in such cases Senior Citizen can claim a deduction of Rs 50,000 in aggregate 

Note: This deduction is available if the amount is paid for benefit of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.

 

2. Higher Exemption limit for Senior Citizens:

The Qualifying age for Senior Citizens has been reduced from 65 years to 60 years from the financial year 2011-12. and from A.Y 2015-16, the Exemption limit for Senior Citizens has been changed from Rs. 2,50,000 to Rs. 3,00,000 

 Very Senior Citizens have introduced a new category 80 years and above has been created who will be eligible for a higher exemption limit of Rs. 5,00,000. Senior Citizens above the age of 80 years are entitled to have a higher exemption limit of Rs.5,00,000 from the assessment year 2012-13. 

​​Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal taxpayers. Exemption limit is the quantum of income up to which a person is not liable to pay tax.

The exemption limit granted to senior citizen and very senior citizen for the financial year 2019-20 is as follows :

a. SENIOR CITIZEN:

A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2019-20 available to a resident senior citizen is Rs. 3,00,000. The exemption limit for 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 a higher exemption limit is available to a resident senior citizen as compared to normal taxpayers.

b.VERY SENIOR CITIZEN:

A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2019-20 available to a resident very senior citizen is Rs. 5,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. 

 

3. A reverse mortgage for senior citizens:

The reverse mortgage was created under a scheme and was notified by the Central Government shall not be regarded as a transfer u/s 2(47). Reverse mortgage refers to a concept introduced by Finance 2007 which provides a senior citizen will be able to avail of monthly income streams by mortgaging a house owned by him. 

 

4. Higher Deduction u/s 80DDB for Senior Citizens and Super Senior Citizens:

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified conditions. Generally, this deduction is available up to Rs 40,000. However, if the patient is a senior citizen, then a deduction of Rs 1,00,000 is allowable.

 

5. Deductions under Section 80TTB:

Section 80TTB ​of the Income Tax law related to the provisions relating to tax benefits 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 Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.

 

6.Relief under section 194A:

Section 194A of the Income Tax law gives corresponding provisions that no tax shall be deducted at source from payment of interest to a senior citizen up to Rs. 50,000.

 

7. Exemption from e-filing of an income tax return to very senior citizen:

​​From the assessment year 2017-18 onwards any taxpayer filing return of income in Form ITR 1/4 and having a refund claim in the return or having total income of more than Rs. 5,00,000 is required to furnish the return of income electronically with or without digital signature or by using an electronic verification code. However, Income-tax Law grants relaxation from e-filing in the above case to very senior citizens.

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, i.e., for him e filing of ITR 1/4 (as the case may be) is not mandatory. However, he may go for e-filing if he wishes.

 

 

CONCLUSION:

It is very important to have Knowledge about the tax benefits offered under the Income-tax Law to a senior citizen/very senior citizen are available only to resident senior citizens and residents very senior citizens. These benefits are not available to a non-resident even though he may have attained the age of 60 or 80 years.

 


 

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