Filing ITR as Senior Citizen?
You Can Pay Tax Lesser Than Others.
While filing your I-T Return, the income on which you need to pay tax is determined first and then the tax amount is computed at the rates prescribed for that particular year. For individual taxpayers, these rates depend upon the slabs of income in which your income falls. The income is not taxed up to a certain amount and this amount is called a maximum exemption limit. This amount is different for normal resident individual taxpayers and senior citizen taxpayers. Besides this direct benefit in tax outgo, the senior citizens are also eligible for various other benefits which go on to reduce their tax payment.
The resident senior citizens are generally persons who are retired from their employment and have income patterns different from other persons. This income is earned by them either from their past service or savings from their earnings while in gainful employment. The taxation and deductions available for the senior citizens are mostly in respect of the incomes that are mostly earned by senior citizens and their needs in their age. However, for those taxpayers who have retired on turning a senior citizen, taxation of retirement benefits is a must-know thing. This article attempts to introduce the senior citizens with different tax benefits to which they are entitled to. These tax benefits are over and above the ones ordinarily available to resident taxpayers.
Who is a senior citizen?
For the purposes of income tax, senior citizen is a person who has attained the age of 60 or more but before 80 years.
Who is a very senior citizen/super senior citizen?
For the purposes of income tax, senior citizen is a person who has attained the age of 80 or more.
Tax benefits for senior citizens and super-senior citizens
1. Enhanced Maximum exemption limit:
For normal individual taxpayers, the tax is computed on taxable income above ₹250,000/-, however, for senior citizens, they are required to pay tax only when their income is above ₹300,000/- and for super-senior citizens such limit is at ₹500,000/-. This means, if the gross income of the senior citizen is ₹300,000/-, he need not pay any tax nor file his I-T Return. Such a limit for the super-senior citizens is ₹500,000/-.
2. No Advance Tax Payment
Any taxpayer who is having tax liability of more than ₹10,000/- is required to pay advance tax in the financial year in which such income is earned. However, if you are a senior citizen or a super-senior citizen and do not have any income from business or profession, you need not pay any advance tax and no interest on that account will be levied against you whilst you pay self-assessment tax while filing I-T Return.
3. Excess deduction on interest income and exemption from TDS
Normally, in case of savings bank interest, you get a deduction up to an amount of ₹10,000/- and there is no deduction in respect of interest on fixed deposits. However, in respect of senior citizens and super-senior citizens, this limit is ₹50,000/- and unlike normal incidences, this deduction is applicable to both savings bank account interest as well as interest on fixed deposits. Consequentially in the case of senior citizens and super-senior citizens, the banks are not supposed to deduct TDS on interest income up to this limit. Read more on this here.
4. Excess deduction on account of health insurance and medical expenses
For taxpayers other than senior citizens, the deduction on account of health insurance premium is of ₹25,000/- which includes ₹5000/- on account of preventive health check-ups. However, for senior and super-senior citizens, this limit is ₹50,000/-. This includes the amount of ₹5000/- on account of preventive health check-ups.
5. Excess deduction on account of health insurance and medical expenses
For taxpayers other than senior citizens, the deduction on account of medical treatment of specified diseases is of ₹40,000/-. However, for senior and super-senior citizens, this limit is ₹100,000/-. These specified diseases are listed in the Income-tax rules and include Dementia, Parkinson’s disease, Chorea, and malignant cancers, etc.