Income tax laws in India have been framed so as to provide senior citizens with the maximum possible income tax benefits. Some significant benefits available to senior citizens (above 60 years of age) and super senior citizens (above 80 years of age) have been discussed in this article.
Higher basic threshold limit
First and foremost, resident senior citizens and resident super senior citizens enjoy a higher basic threshold limit of Rs 3 lakhs and Rs 5 lakhs respectively. This otherwise means income up to this limit is completely tax-free. Further, these taxpayers are also exempted from filing their income tax returns as long as their gross income falls within these limits.
Benefits under Section 80D
Section 80D is a deduction that a taxpayer can claim from his gross income, of premium he pays to keep in force a medical insurance policy is taken for himself, his family or his parents. The deduction that can be claimed is Rs 25,000 on policy take for self, spouse and children and an additional Rs 25,000 if the policy is taken for parents. However, if the insured is more than 60 years old, a deduction of Rs 50,000 can be claimed as against Rs 25,000.
Benefits under Section 80DDB
All senior citizens (senior and super senior) get a deduction from taxable income up to Rs 1 lakh towards amount actually spent for medical treatment of specified disease such as neurological diseases, malignant cancers, chronic renal failure, Hematological disorders etc. This deduction is just Rs 40,000 for an individual who is not a senior citizen.
Benefits under section 80TTB
Until FY 2017-18, Section 80TTA provided an exemption up to Rs 10,000/- on income earned from interest received from a savings deposits. Budget 2018 has introduced a new section 80TTB which provides for a claim of the deduction up to Rs 50,000 on any and all income received from interests from savings deposits, fixed deposit etc., and this deduction is available only for senior and super senior citizens. With the introduction of this section, senior citizens enjoy an additional exemption of interest income from fixed deposits too which is not available to taxpayers that are not senior citizens.
No Advance tax payment - Taxpayers who are of the age of 60 years and above not having income from any business or profession, are exempted from the payment of advance tax. As a failure to comply with advance tax provisions attracts penal interest, this relaxation is a boon to senior citizens.
Exemption from e-filing of tax return- E-filing of the tax return is mandatory from FY 2016-17 onwards for any taxpayer filing return and who has claimed a refund. Further, even for a taxpayer who has an income of more than Rs 5 lakhs, e-filing is a mandate. However, this mandate is relaxed for a super senior citizen who can still continue to file his returns manually. However, considering the ease of filing returns online, this provision may not be very beneficial.
(Author is the founder & CEO of ClearTax)