CA Sandeep Kanoi

CA Sandeep KanoiA person becomes senior citizen under Income Tax Act in any year after attaining the age of 60 even for one day. Once he attains 60 years, his status as senior citizen in that financial year, gives him some relief. There are not many income tax exemptions available for senior citizens. These are listed below:

1. Higher Exemption Limit

From F.Y. 2011-12  Qualifying age for Senior Citizens has been reduced from 65 years to 60 years and from A.Y. 2015-16 exemption limit for Senior Citizens has been enhanced from Rs. 2,50,000 to Rs. 3,00,000.  A new category of Very Senior Citizens, 80 years and above, has been created who will be eligible for a higher exemption limit of Rs. 5,00,000. Senior citizen above the age of 80 years are entitled to higher exemption Limit of Rs. 5,00,000 from A.Y. 2012-13.

The exemption limit granted to senior citizen and very senior citizen for the financial year 2015-16 is as follows :

Senior citizenVery senior citizen
A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2016-17 available to a resident senior citizen is Rs. 3,00,000. In other words, a resident senior citizen is not liable to pay any tax up to income of Rs. 3,00,000. The exemption limit for 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 higher exemption limit is available to a resident senior citizen as compared to normal tax payers.A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2016-17 available to a resident very senior citizen is Rs. 5,00,000. In other words, a resident very senior citizen is not liable to pay any tax up to income of Rs. 5,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000 in the form of higher exemption limit is available to a resident very senior citizen as compared to normal tax payers.

2. Reverse mortgage for senior citizens

Reverse mortgage’ – a concept introduced by Finance 2007 -provides that a senior citizen will be able to avail of monthly income streams by mortgaging a house owned by him.  For more details read the following article :- Reverse mortgage created under a scheme made and notified by the Central Government shall not be regarded as a transfer U/s. 2(47)

3. Tax benefits on medical insurance hiked

A senior citizen can avail of higher of higher deduction of Rs 20,000 u/s Section 80D and the same limit is been further increased to Rs. 30,000/- from A.Y. 2016-17.

4.  Tax benefit in respect of Expense on medical expenditure in respect of a very senior citizen

With effect from A.Y. 2016-17 Any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D. Section 80D- Hike in Deduction Limit for Mediclaim
5. Higher Deduction u/s 80DDB for Senior Citizens and Super Senior Citizens

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Generally this deduction is available upto Rs 40,000 . However , if the patient is a senior citizen, then deduction of Rs 60,000 is allowable.

From A.Y. 2016-17 higher limit of deduction of upto eighty thousand rupees is allowable, for the expenditure incurred in respect of the medical treatment of a “very senior citizen”. A “very senior citizen” is proposed to be defined as an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.   Section 80DDB– Limit raised & waived condition of certificate

6. No Routine Income Tax Scrutiny of Senior Citizens  -Appreciating the concern of these taxpayers and with a view to mitigate their hardships, Central Board of Direct Taxes has reviewed its scrutiny selection procedure. In order to redress the grievance, it has been decided that during the financial year 2011-12, cases of senior citizens and small taxpayers, filing income-tax returns in ITR-1 and ITR-2 will be subjected to scrutiny only where the Income Tax department is in possession of credible information. Senior citizens for this purpose would be individual taxpayers who are 60 years of age or more.

7. Senior Citizens not having Business Income Exempt From Advance tax payment :- As per section 208 From Financial year 2012-13  resident senior citizen, not having any income chargeable under the head “Profits and gains of business or profession”, shall not be liable to pay advance tax and such senior citizen shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax.

8.  Senior citizens receive a higher interest (up to 50 bps) on a 5-year fixed deposit, which is eligible for deduction from the total income under Section 80C.

9.  Senior citizens can claim exemption on the tax deducted at source (TDS) on interest income earned on deposits. It can be done by submitting Form 15H under Section 197 of the IT Act.

10. Exemption from e-filing of income tax return to very senior citizen

From the assessment year 2015-16 onwards any taxpayer filing return of income in Form ITR 1/2/2A and having a refund claim in the return or having total income of more than Rs. 5,00,000 is required to furnish the return of income electronically with or without digital signature or by using electronic verification code. However, Income-tax Law grants relaxation from e-filing in above case to very senior citizen.

In other words, a very senior citizen filing his return of income in Form ITR 1/2/2A and having total income of more than Rs. 5,00,000 or having a refund claim can file his return of income in paper mode, i.e., for him e filing of ITR 1/2/2A (as the case may be) is not mandatory. However, he may go for e-filing if he wishes.

Some Frequently Asked Question on Attaining the Age of Senior Citizen or Super Senior Citizen in a Particular Assessment Year with Practical Examples-

  • At what age a person will qualify as a senior citizen and very senior citizen under the Income-tax Law?

    Before understanding the age criteria, it is very important to know that the tax benefits offered under the Income-tax Law to a senior citizen/very senior citizen are available only to resident senior citizen and resident very senior citizens. In other words, these benefits are not available to a non-residenteven though he may be of higher age. The age and other criteria to qualify as a senior citizen and very senior citizen under the Income-tax Laware as follows :

    Criteria for senior citizenCriteria for very senior citizen
    Must be of the age of 60 years or above but less than 80 year at any time during the respective year.Must be of the age of 80 years or above at any time during the respective year.
    Must be residentMust be resident
    IllustrationIllustration

    (1) Mr. Kumar (resident in India) attained the age of 60 years during the financial year 2016-17. Will he qualify as senior citizen under the Income-tax Law for the financial year 2016-17?

    **

    Yes, since Mr. Kumar is a resident and he attained the age of 60 years during the year 2016-17, he will be treated as senior citizen under the Income-tax Law for the financial year 2016-17.

    (2) Mr. Kamal (non-resident) attained the age of 60 years during the financial year 2016-17. Will he qualify as senior citizen under the Income-tax Law for the financial year 2016-17?

    **

    Mr. Kamal is a non-resident, the benefits of senior citizen under the Income-tax Law are available to a resident only, and hence, Mr. Kamal will not be treated as senior citizen under the Income-tax Law for the financial year 2016-17.

    (1) Mr. Raja (resident in India) attained the age of 80 years during the financial year 2016-17. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2016-17?

    **

    Yes, since Mr. Raja is a resident and he attained the age of 80 years during the year 2016-17, he will be treated as a very senior citizen under the Income-tax Law for the financial year 2016-17.

    (2) Mr.Rajat (non-resident in India) attained the age of 80 years during the financial year 2016-17. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2016-17?

    **

    Mr.Rajat is a non-resident, the benefits of very senior citizen under the Income-tax Law are available to a resident only and, hence, Mr.Rajat will not be treated as very senior citizen under the Income-tax Law for the financial year 2016-17.

(Republished with amendments and compiled with Material Available on Income Tax Website)

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