Major Tax Benefits For Senior Citizens In India

Are you a senior citizens?

As a senior citizen, it is difficult to manage daily expenses when your sources of income are limited. Therefore, the government provides senior citizens with an abundance of tax benefits so that they can enjoy a stress-free retirement. The Union Budget 2018 brought several tax reforms in favour of senior citizens, which adds icing on the cake.

So, let’s understand these tax benefits in detail.

Who is a senior citizen for Income tax purpose?

Under the Income Tax Act, 1961, there are two categories of senior citizens:

• Senior Citizen – Senior citizen is an individual who falls in the age group of 60 years to less than 80 years at any time during the financial year for which he is paying taxes and filing return.
• Super Senior Citizen – Super senior citizen is an individual who ages 80 years or more at any time during the concerned financial year.

What are major tax benefits for Seniors in India?

Here are the key benefits for senior citizens that you must be aware of:

1. Tax Benefits:

• The government has granted a higher ‘exemption limit’ by reducing the taxes for senior citizens and super senior citizens as compared to normal taxpayers. Exemption limit is the amount of income up to which a person is not liable to pay tax.
• The exemption limit for senior citizen is Rs 3,00,000 whereas the limit for super senior citizens is Rs 5,00,000.

Tax rates for senior citizens:

Tax rates for super senior citizens:

2. Exemption of Advance Tax:

As per the Income Tax Act, an individual whose estimated tax liability after any TDS deduction exceeds Rs 10,000, should pay his tax in advance in the form of advance tax. However, a resident senior citizen is exempt from paying advance tax as per section 207.

Which means, an individual will not be liable to pay advance taxes if:

• He is an individual.
• He is resident in India as per the Income Tax Act.
• He is of the age of 60 years or above at any time during the financial year.
• He is not having any income chargeable to tax under the head “Profits and gains from business or profession”.

3. No Income Tax Scrutiny:

Scrutiny of income tax returns is a tool of income tax department through which it ensures compliance by taxpayers. However, a special privilege is granted to resident senior citizens by the Income Tax Department. A senior citizen is subjected to scrutiny only when the Income Tax Department has real creditable information to initiate scrutiny proceedings which means that they need to find proof of irregularities in tax payments.

4. Tax Benefits on Medical Insurance:

Health and medical insurance is essential for everyone as it provides financial assistance and assurance. To ensure the well-being of a taxpayer and in order to motivate people to live a healthy life, the Income Tax Act has granted exemption benefit under section 80D to all senior citizens residing in India. As a senior citizen, you can avail a tax deduction of up to Rs 50,000.

5. Non-Deduction of TDS (Tax Deducted at Source) on Interest:

For all individuals, TDS on interest earned is deducted on FD (Fixed Deposit). However, as a senior citizen, if your total income is below the taxable limit in the given financial year, then no TDS will be charged on interest generated from FD. You can make use of form 15H which will help you save TDS on the interest you earn on your investment on fixed deposit.

6. Deduction for specified diseases:

As per section 80DDB, if you are a senior citizen and are suffering from critical diseases like Cancer, AIDS, etc. then you can claim a tax deduction of up to Rs 60,000. The deduction limit is increased to Rs 80,000 if you fall under the category of super senior citizen. The diseases you suffer should be approved by the income tax

Department in order to avail this benefit. You can be eligible for deduction under section 80DDB only if you furnish a certificate from the hospital or a medical specialist recognised by the Medical Council of India.

7. No tax on Reverse Mortgage Loans:

In 2007, the Reverse Mortgage Scheme was introduced by the government of India for the benefit of senior citizens of the county. As per this scheme, the senior citizens receive regular income by mortgaging self-owned or self-occupied home. This scheme is beneficial to the senior citizens as the money earned through reverse mortgage loan is not considered as income. Therefore, it is free from tax liability which means the senior citizen participating in this scheme is completely exempt from taxes.

8. E-filing not compulsory for senior citizens:

E-filling of you income tax return is mandatory as per the Income Tax Department. But all the senior citizens may not be aware or comfortable using computer and internet to file their taxes. So, the income tax department has granted a relaxation to individuals who fall under the category of super senior citizen. Such people can choose to file their returns offline in paper form.

9. Free Tax Filing on H&R Block:

H&R Block is an income tax return filing intermediary which makes online tax filing super easy for senior citizens. Taxpayers can hire experts of H&R Block to get their income tax return e-filed easily.