Significant Income Tax Benefits for Senior Citizens

Every individual who has annual income above the minimum exemption limit or has received any income on which tax was deducted at source (TDS), needs to file their Income Tax Return (ITR) every year. However, Income Tax Act pampers senior citizens and very senior citizens with several tax benefits. 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.’

Income tax benefits available to resident senior and very senior citizens range from higher exemption limit to deductions under various sections on account of medical expenses and interest earned on deposits.

Here are some of the significant income tax benefits Senior and Very Senior Citizens can enjoy:

Higher exemption limit

The basic exemption limit for citizens below 60 years of age is Rs. 2.5 lakh in a financial year. But for senior citizens and very senior citizens, they are granted a higher exemption limit.

The exemption limit for a senior citizen is Rs.3,00,000 and for very senior citizen, the exemption limit is of Rs. 5,00,000.

Standard Deduction on Pension Received

There is a standard deduction of maximum up to Rs 50,000 for pensions received from employer. This is applicable for annuity payments that are taxable in the same way as salaried income.

No Advance Tax

Another benefit for senior citizens is that they don’t have to pay advance tax unless they have income from business or profession, while individuals below 60 years of age mandatorily have to pay advance tax if the estimated tax payable in a financial year is Rs 10,000 or more.  And, If they do not own any business, they have to pay self-assessment tax.

Benefits on filing of ITR

Super senior citizens are given the provision of filing their Income Tax Return (ITR) through Sahaj (ITR 1) or Sugam (ITR 4) to claim tax refund. They can file ITR through either online or offline mode during a financial year.

Deduction on interest income on bank deposits

Citizens below 60 years of age can claim deduction up to Rs 10,000 on interest on Savings Bank Account(s) u/s 80TTA, but the case is different for Senior Citizens and Very Senior Citizens. They can claim deduction up to Rs 50,000 on interest on Savings Bank Account and other deposits.

Deduction for payment of medical insurance premium

Medical insurance premium up to ₹50,000 paid in a year by a senior citizen is allowed as a deduction under Section 80D of the Income Tax Act. If the senior citizen is paying medical insurance premiums for his or her parents who are also senior citizens, he or she can claim an additional deduction of up to ₹50,000.

Deduction for medical treatment of specified diseases

As per section 80DDB, a senior citizen taxpayer can claim deduction of up to ₹1,00,000 for expenditure incurred by him on medical treatment of specified diseases.