The Income-tax law very well takes care of the senior citizens of the nation by offering them several tax benefits.Here is all you want to know about special benefits allowed by the Income Tax Act to the resident senior citizens. People older than 60 years of age are called senior citizens, people above the age of 80 years are very senior citizens. To start with, very senior citizens filing ITR using form 1 or 4 is allowed to file his income tax return in paper mode, while the e-filing option is also available.
Also, a senior citizen enjoys relief from payment of advance tax. As per section 207 a senior citizen,not having any income from business or profession, is not liable to pay advance tax. In case of non-senior citizens, every person whose estimated tax liability for the year is ₹10,000 or more, shall pay his tax in advance.
Tax benefits with respect to medical expenditure and insurance
Section 80D of the Income Act provides a higher deduction limit of ₹50,000 ( ₹25,000 for people under age of 60) for payment of premium towards medical insurance policy of senior citizens.
Further Section 80DDB of the IT Act allows tax deduction on expenses incurred by an individual on himself or a dependent towards the treatment of specific diseases as stated in the act. The deduction amount can be availed for the sum actually paid or ₹40,000, whichever is lower. The maximum deduction amount in case of a senior citizen is ₹1 lakh ( ₹40,000 for people below 60 yeas of age).
Tax benefit on interest on bank deposit
Section 80TTB of the Income Tax law gallows tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount upto ₹50,000 earned by the senior citizen. Both the interest earned on saving deposits and fixed deposits are eligible for deduction under this provision.
Section 194A of the Income Tax law 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 ₹50,000. Therefore limit is to be computed for every bank individually.
Benefits in respect of tax rates
Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal tax payers. Exemption limit is the quantum of income up to which a person is not liable to pay tax.
A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit available to a resident senior citizen is ₹3 lakh ( ₹2.50 lakh for non-senior citizens).
A very senior citizen is granted a higher exemption limit of ₹5 lakh.
