Senior citizens do not have any income tax deductions. These are listed below:
1. Higher exemption limit for senior citizens
From F.Y. Eligibility age for senior citizens in 2011-12 has been reduced from 65 years to 60 years and A.Y. The 2015-16 exemption limit for senior citizens is Rs. 2,50,000 to Rs. 3,00,000. A new category of senior citizens aged 80 and above has been created, with a maximum exemption limit of Rs. 5,00,000. The maximum exemption limit for senior citizens above 80 years of age is Rs. 5,00,000 A.Y. 2012-13. Senior citizens and most senior citizens are offered a higher exemption limit compared to ordinary taxpayers. The deduction limit is the amount of income that a person is not liable to pay tax. The exemption limits for senior citizens and most senior citizens in the financial year 2020-21 are as follows:
The senior citizen is the most senior citizen
A senior citizen is given a higher exemption limit compared to a senior citizen. The exemption limit for the financial year 2020-21 is Rs. 3,00,000. Exemption limit for non-senior citizens is Rs. 2,50,000. Thus, Rs. 50,000 is available to a senior citizen who is a citizen in the form of a higher deduction limit compared to ordinary taxpayers. The very senior citizen is given a higher exemption limit compared to others. The exemption limit for the financial year 2020-21 is Rs. 5,00,000. Exemption limit for non-senior citizens is Rs. 2,50,000. Thus, Rs. 2,50,000 is available to the most senior citizen residing in the form of a higher deduction limit compared to ordinary taxpayers.
2. Reverse mortgage for senior citizens
Reverse Mortgage '- a concept introduced by Finance 2007 - provides that a senior citizen can earn monthly income streams by mortgaging the house he owns.
3. Tax benefits of elevated medical insurance for senior citizens
Subtraction under Section 80TTB
Section 80TTB of the Income-tax Act provides for tax deductions based on interest income on deposits from banks or post offices or co-operative banks up to Rs. 50,000 earned by a senior citizen (i.e., a person 60 years of age or older). Both the deposit and the interest earned on saving the fixed deposit are eligible to deduct under this rule.
5. Relief from DTS under Section 194A
Section 194A of the Income Tax Act stipulates that a senior citizen is liable to pay any tax of Rs. 50,000. Therefore, the limit should be calculated separately for each bank.
6. Higher exemption for senior citizens and super senior citizens 80DDB
Section 80TDP exempts an appraiser from incurring the cost of medical treatment of a particular disease. Usually, this exemption is available up to Rs 40,000. However, if the patient is a senior citizen, a deduction of Rs.1,00,000 is allowed. The condition of Section 80DDB-Certificate has been raised and waived
7. Exemption from advance tax for senior citizens who do not have business income: -
According to Section 208, the estimated tax liability for the year is Rs. 10,000 or more to pay his tax in advance in the form of "advance tax".
However, Section 207 provides relief to a senior citizen residing in advance from paying taxes (i.e., a person 60 years of age or older in the relevant financial year). According to Section 207, a senior citizen residing in the financial year 2012-13 will not be able to pay tax in advance without collecting any income under the heading “Profits and Gains of Business or Business” and such Senior Citizen will be allowed to evict him by paying self-assessment tax (D.T. Except S).
8. Senior citizens receive higher interest (up to 50 bps) on a 5 year fixed deposit, which is eligible for deduction from gross income under Section 80C.
9. Senior citizens can claim tax deductible at source (DTS) on interest income earned on deposits. This can be done by submitting Form 15H under Section 197 of the IT Act.
10. Exempt most senior citizens from e-filing income tax returns
The Income Tax Act, 1961 does not exempt senior citizens or very senior citizens from filing income tax returns. However, a new section 194B has been added to the Finance Act, 2021 to provide relief to senior citizens (those aged 75 or over) and reduce the compliance burden on them.
Under this provision, if a bank company has an account that receives its pension income, it is tax-deductible. If the recipient is a resident individual, at any time aged 75 or over, the tax must be deducted under this new rule if the following conditions are met:
If the above conditions are satisfied, the deductor will calculate the deductible's income after the exemption allowed under Chapter VI-A and deduct it under section 87A. Tax on such income should be deducted based on prevailing rates. If the tax is deducted from the income of such a senior citizen, he or she will not be liable for a refund of income for the previous year in which the tax was deducted.
Something to note
At what age does a person qualify as a senior citizen and a very senior citizen under the Income Tax Act?
Before understanding the age criteria, it is important to know that the tax benefits offered under the Income Tax Act to a Senior Citizen / Very Senior Citizen are only available to both Senior Citizens and Senior Citizens of Residence. In other words, these benefits are not available to a resident even if they are older. The age and other criteria for qualifying as a Senior Citizen and Senior Citizen under the Income Tax Act are as follows:
Criteria for Senior Citizen: must be 60 years of age or older at any time of the year but under 80 years of age. Must be 80 years of age or older at any time of the year. Also, must be a resident.