In our country, great respect has been given to the Senior Citizens in all fields including under the Income Tax Act. In all modes of travelling concessional rates are provided either by Air, Train or Road, separate queue etc. Under the Income Tax Act, benefits are given to Senior Citizen and Very Senior Citizen that too only Resident of India.

Senior Citizen must be of the age of 60 years or above but less than 80 years at any time during the respective year

Very Senior Citizen must be of the age of 80 years or above at any time during the respective year.

Benefits for Senior Citizens under Income TaxHigher Basic Exemption Limits:

We know that for ordinary individual tax payers the basic limit for exemption, up to which he is not required to pay tax is presently Rs. 2,50,000 up to A.Y. 2021-22. However for Senior Citizens, the basic exemption limit is fixed at a higher figure of Rs. 3,00,000. For Very Senior Citizen do not have to pay tax up to Rs. 5,00,000 of Annual total income.

Income Tax Rates for Senior and Ver80ddby Senior Citizens are as under:

Total Income Rates of Taxation
  Senior Citizen   Very Senior Citizen
Up to Rs.3,00,000 NIL NIL
Rs.3,00,000 to Rs.5,00,000 5% NIL
Rs.5,00,000 to Rs.10,00,000 20% 20%
More than Rs.10,00,000 30% 30%

Higher deduction for Medical Insurance Premium: Section 80D

Deduction in respect of health insurance premium paid by an individual and HUF is deductible up Rs. 25,000 and additional deduction up to Rs.25,000 for the health insurance premium paid for parent or parents of the assessee is available.

Under above circumstances if an assessee is a Senior or Very Senior Citizen deduction will be available up to Rs.50,000. Please remember that for claiming this deduction the health insurance premium is paid by any mode other than cash.

Higher deduction for medical treatment : Section 80DDB

Over and above any medical expenditure incurred on medical treatment of specified diseases.  To claim the amount of expenditure the assessee is required to obtain the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a hematologist, an immunologist or such other specialist, as prescribed in the amended rule 11DD(2). Allowable amount is of Rs.1,00,000.

Higher deduction limit for interest from Banks and Post Office: Section 80TTB

Individual tax payers, other than senior citizens are allowed maximum deduction of Rs. 10,000 u/s 80TTA in respect of interest income from saving bank account. However from A.Y. 2019-20 onwards, a senior citizen are allowed the deduction up to Rs. 50,000 u/s 80TTB in respect of interest income earned not only on savings bank accounts but also on interest income earned on any bank deposits or any deposits with  post office or co operative Banks.

No deduction of Tax : Section 194A

Section 194A of the Income Tax Act 1961 gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or post office or co operative bank to a senior citizen up to Rs. 50,000. There for limit is to be computed for every bank individually.

Exemption from payment of Advance Tax: Section 207

As per section 208 every persons whose estimated tax liability for the year is Rs. 10,000 or more shall pay 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.

Benefit of Standard Deduction: Section 16

From A.Y. 2019-20, a standard deduction up to Rs. 40,000 against salary income earned during the year has been introduced u/s 16. Accordingly, a Senior Citizen who is in receipt of pension income from his former employer can claim up to Rs. 40,000 against such salary income. This limit is increased to ₹ 50,000p.a. by Finance Act, 2019 [FY 2019-20, A/Y 2020-21].

Exemption from e-filling of income tax return:

Very Senior Citizen aged 80 years or more filling his return of income in Form SAHAJ (ITR-1) or SUGAM (ITR-4) 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. For such individuals, electronic filling of ITR 1 or ITR 4 ( as the case may be) is not mandatory. However, he may opt or e – filling, for he choose to do so.

Form No 15H for Non deduction of TDS:

A senior citizen may submit form No 15H to the deduct or for non deduction of TDS on certain incomes referred to in that section, if the tax on his/her estimated total income of the concerned year comes at nil.

Transfer of Capital assets under ‘Reverse Mortgage Scheme’

The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain (Nor under any other head of income).

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Qualification: CA in Practice
Company: AJIT SHAH & ASSOCIATES
Location: AHMEDABAD, Gujarat, IN
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12 Comments

  1. Santosh Prasad. says:

    I’m a pensioner and I’m not covered under medical insurance.Im under treatment for cancer.Am I eligible for tax exemption under section 80 DDB of the IT Act.?

  2. Kashinath Dhole says:

    I am a senior a citizen & until now I was filing my return of income on or before 31st July.
    Recently FM extended the return filing date to end of November. Please let me know whether I am chargeable to interest under Section 234A if I file my return on or before 30/11/2020? Please reply

  3. Subramanian says:

    Std deduction seems to be Rs. 50000/- Trying to fill form 2 (java utility) provided by the IT Dept. it automatically deducted 50000/- as Std Deduction.

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