Dr. Suresh Surana said apart from the benefit of deductions which can be claimed u/s 80C of the Income Tax Act, 1961 (hereinafter referred to as ‘the IT Act’), every Senior Citizen may consider the following tax planning alternatives or tools:

1. Contribute towards National Pension Scheme (NPS) for claiming an additional deduction of Rs. 50,000 u/s 80CCD(1B)

The Pension Fund Regulatory And Development Authority increased the Maximum age for joining NPS to 65 years and accordingly an individual aged between 60 to 65 years can also join NPS and continue upto the age of 70 years in NPS. Such senior citizens may not only claim a deduction of the contribution made to such NPS u/s 80C within the overall cumulative limit of Rs. 150,000 p.a. but also claim an additional deduction u/s 80CCD(1B) of upto Rs. 50,000 in a Financial Year which is over and above the combined deduction of Rs, 1,50,000 p.a.

 

2. Availing deduction w.r.t. Medical Insurance Premium

In accordance with the provisions of Section 80D of the IT Act, Resident Senior Citizens may avail a higher deduction of upto Rs. 50,000 for payment of premium towards the medical insurance policy. Further, Senior Citizens above the age of 60 years who are not covered by Health Insurance, are to be allowed a deduction of Rs. 50,000 towards actual medical expenditure.

Senior Citizens may also consider claiming deduction (as shall be relevant) w.r.t. to the following:

1. Deduction in respect of medical treatment of specified diseases

Section 80DDB of the IT Act provides resident individual taxpayers to claim a deduction for amount actually paid for the medical treatment of specified disease (such as dementia, Parkinson, malignant cancers, etc.) for such taxpayer himself or a dependent relative (spouse, children, parents, brothers and sisters). Such deduction in a financial year is available to senior citizens and would be restricted to the amount of actual expenditure incurred or Rs. 1,00,000, whichever is lower and would be allowed only in cases where the specified disease has been certified by the requisite medical authority as prescribed. Further, it is pertinent to note that any insurance claim received by such senior citizens should be reduced from the amount of claim of deduction.

 

2. Deduction in case of a person with disability

With increasing age, senior citizens generally tend to suffer from various diseases and may suffer disability as a result of the same. Such senior citizens suffering from specified disability may avail a flat deduction per annum of Rs. 75,000 for normal disability and Rs. 1,25,000 for severe disability based on the extent of disability certified by the medical practitioner.

 

3. Donation to Charitable Organisation or Institution

Senior citizens may tend to make donations for charitable purposes. However, donations made to approved charitable institutions can be claimed as deductions u/s 80G of the IT Act. An indicative list of such approved institutions may include PM National Relief Fund, National Defence Fund, Fund for Army, registered Public Charitable Trusts, etc. Such deduction would be allowed for 50% or 100% of the donation made (with or without qualifying limits) depending on the organisation/ institution to which such donation is made.

 

4. Deduction w.r.t. certain Interest Income

Senior citizens may claim deduction u/s 80TTB of the IT Act in respect of interest on deposits with a banking company, cooperative society and Post office for upto Rs. 50,000 in a particular financial year. It is pertinent to note that such deduction is available to senior citizens not only with respect to savings account interest but also for interest on fixed deposits.

Apart from the above, Section 194P of the Income Tax Act, 1961 provides resident Senior Citizens aged 75 years exemption from filing income tax returns provided such Senior Citizen has pension income and interest income only & interest income accrued / earned from the same specified bank in which he is receiving his pension.