The Indian Income Tax Act defines any resident individual who is 60 years or above as a senior citizen and 80 years for a very senior citizen. Here are nine tax benefits available to them:
- Higher tax exempt threshold
A higher level of income is exempt from tax for senior citizens. Have a look at table below.:
|Category||Annual Exempt Income|
|All citizens||Rs 2.5 lakh|
|Senior citizens||Rs 3 lakh|
|Very senior citizens||Rs 5 lakh|
- Tax Benefits for Health
Senior Citizens get a higher deduction for health insurance under Section 80D. If your children pay your premium, they can avail of this higher deduction, as well as their own.
|All citizens – Rs 25,000||Senior citizens – Rs 30,000|
- Critical Illness
A disease is the biggest curse of old age. However, for medical expenses going up to Rs 60,000 (and Rs 80,000 for very senior citizens) for critical illnesses (as specified by the department), senior citizens get a tax deduction under Section 80 DDB. A medical certificate from a recognized medical specialist is a must for this.
- No Advance Tax
Are you a senior citizen with no business income? You need not make advance tax payments! You only have to pay self-assessment tax on overall income in the financial year.
- Benefits related to Fixed Deposits
As a senior citizen, you can earn a higher rate of interest on fixed deposits made for five years. This income is deductible from total income under section 80 C.
- No TDS if income below threshold
Senior Citizens can submit form 15H to make sure that banks do not charge them TDS on the interest you earn on fixed deposits provided total income is below the exemption threshold of Rs 3 lakh.
- Reverse Mortgage Loan Income is not taxed
Senior citizens can mortgage a property (via the reverse mortgage) that they own and get a stream of payments against it. This income does not carry any tax.
- Exemption from IT scrutiny
Unless the IT department has some credible information that warrants scrutiny of the income tax returns filed, senior citizens are exempt from this process.
9. Exemption from e-filing of income tax returns for very senior citizens
Very senior citizens can file their income tax return in paper mode rather than online through e-filing. However, they can use the e-filing mode if they wish to.
While it is true that you are only as old as you think you are, you can definitely claim extra tax benefits once you cross 60 years.