7 special income tax benefits for senior citizens
2 min read 23 Jun 2022, 09:45 AM ISTThere are certain tax benefits for senior citizens. Let's take a look at the income tax benefits available to senior citizens
PremiumThere are certain tax benefits for senior citizens that they can avail of. Apart from tax benefits the process of income tax e-filing has also been specifically made hassle-free for them. Let's take a look at the income tax benefits available to senior citizens
Different tax-slab rates
The income tax slab rates for senior citizens are different compared to non-senior citizens.
Interest income exemption up to ₹50,000
CA Amit Gupta, MD, SAG Infotech said that from FY 2018-19, Section 80TTB came into action that allows a deduction for the interest of ₹ 50,000. The amount earned over ₹ 50,000 will be taxed according to the Slab Rates specially designed for Senior Citizens. However, it is important to note that in such cases deduction will not accrue under section 80TTA of ₹ 10,000 for interest on the savings account.
Deduction under section 80D for medical insurance premium payments
Section 80D allows non-senior citizens a deduction of ₹25,000 on medical insurance premium payments, however for senior citizens, it gets increased to ₹50,000. “The limit was ₹ 30,000 earlier but in Budget 2018 it gets increased to ₹ 50,000. Further, section 80D allows deduction not only for the medical insurance premium payment but also for the actual expenditure incurred on treatment by very senior citizens," said Gaurav Kapoor, director and co-founder, Fincorpit Consulting.
Non-deduction of TDS on interest
If the total income of a senior citizen is exempted from income tax and nil tax is payable by him/her for that financial year, he can submit Form 15H for non-deduction of TDS on interest on fixed deposits.
Additionally, with amendments made via budget 2018, the limit for tax deduction under section 194A for senior citizens has also been increased from ₹10,000 to ₹50,000, said Amit Gupta.
Higher deduction under section 80DDB for specified illness
Section 80DDB provides tax deduction relief to taxpayers in case of expenditure on medical treatment of specified diseases. The allowed deductions earlier were ₹ 60,000 for senior citizens, but Budget 2018 increased it to ₹ 1,00,000.
No payment of the advance tax is required
Senior citizens without any business income are exempted from advance tax payment and they only have to pay self-assessment tax on their total income.
No tax on the amount received under the reverse mortgage scheme
With the reverse mortgage scheme, senior citizens get regular payments by mortgaging their home for life while the ownership and possession remain with the senior citizen. With this scheme, on the death of the borrower, the loan gets repaid with earned interest through the sale of the property and the balance amount obtained on the sale gets passed on to the legal heirs. Under this scheme, the amount paid in instalments to senior citizens is completely exempt from income tax.
