Tax News – TheNews “Income Tax benefits for senior citizens”

Benefits available to a senior citizen and very senior citizen in respect of tax rates: 

Senior citizen: A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2020-21 available to a resident senior citizen is Rs 3,00,000, while the exemption limit for a non-senior citizen is Rs 2,50,000. Thus, it can be observed that an additional benefit of Rs 50,000 in the form of a higher exemption limit is available to a resident senior citizen as compared to normal taxpayers.

Very senior citizen: A very senior citizen is granted a higher exemption limit compared to others as the exemption limit for the financial year 2020-21 available to a resident very senior citizen is Rs 5,00,000, whereas, the exemption limit for a non-senior citizen is Rs 2,50,000. This means that there is an additional benefit of Rs 2,50,000 in the form of a higher exemption limit for a resident’s very senior citizen as compared to normal taxpayers.

Very senior citizen is granted exemption from e-filing of income tax return: From Assessment year 2019-20 onwards, a very senior citizen filing his return of income in Form ITR 1/4 can file his return of income in paper mode. For him,/her, e filing of ITR 1/4 (as the case may be) is not mandatory and s/he may also go for e-filing as per his wish.

Resident senior citizen is granted exemption from payment of advance tax: Section 208 says that every person whose estimated tax liability for the year is Rs 10,000 or more, can pay his tax in advance, in the form of “advance tax”. However, section 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207​, a resident senior citizen not having any income from business or profession is not liable to pay advance tax.

Benefits available in respect of interest on deposits in case of senior citizens: According to the Section 80 TTB ​of the Income Tax law, provisions relating to tax benefits are available on account of interest income from deposits with banks or post office or co-operative banks of an amount up to Rs 50,000 earned by the senior citizen. The interest earned on saving deposits and fixed deposits, both shall be eligible for deduction under this provision. Notably,  ​Section 194A of the Income Tax law gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or post-office or a co-operative bank to a senior citizen up to Rs 50,000. Therefore, the limit is to be computed for every bank individually.

Benefits available in respect of expenditure incurred on account of medical treatment of specified diseases on the treatment of a senior citizen: The Section 80D​DB of the Income-tax Law gives various provisions relating to tax benefits available on account of expenditure on medical treatment of specified diseases. 

Benefits available in respect of expenditure incurred on account of the medical insurance premium or medical expenditure to a senior citizen: ​The Section 80D of the Income-tax Law gives various provisions relating to tax benefits available on account of payment of medical insurance premium and other related items.

NOTE-

As per the Income Tax Rules, a person between 60 years and 80 years of age is termed as a ‘senior citizen‘ and a person above 80 years of age is a ‘very senior citizen. ‘