Can a senior citizen claim the following deductions and exemptions from the gross total income to reduce his tax liability for financial year 2019-2020 (assessment year 2020-2021)? 1. ₹1.50 lakh under Section 80 C; 2. ₹50,000 standard deduction; and 3. ₹50,000 under section 80 TTB. I am assuming that if the gross total income is ₹5.50 lakh, then after deductions and exemptions, the net taxable income will be ₹3 lakh, and the tax liability will be nil.
—Name withheld on request
It is assumed that the senior citizen referred to in your query is aged 60 years or above and is a resident of India as per the Income-tax Act, 1961 (the Act). Any individual, including a senior citizen, who has salary income during financial year 2019-20 is entitled to a standard deduction from such salary income under Section 16(ia) of the Act, up to a maximum limit of ₹50,000 per annum or the salary income, whichever is lower. Please note that salary income also includes employment-related pension income.
Any individual, including a senior citizen, can avail of a deduction for eligible payments or contributions or investments made by him during financial year 2019-20 from his gross total income under Section 80C of the Act, up to a maximum limit of ₹1.50 lakh per annum, subject to the prescribed conditions and timeline.
Any senior citizen earning interest income from prescribed deposits (for example, interest on bank deposits and post office deposits, among others) in India, can avail of a deduction from his gross total income, under section 80TTB of the Act, up to a maximum limit of ₹50,000 per annum. Assuming that the resident senior citizen is entitled to the full amount of deductions referred to above (i.e. ₹2.5 lakh per annum), the net taxable income for 2019-20 will be ₹3 lakh per annum (on a gross income of ₹5.50 lakh). Hence, the tax liability payable shall be nil.
