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September 10, 2020

Know all Income Tax Benefits for Senior Citizens and Super Senior Citizen in India

by shivam jaiswal in Income Tax

Know all Income Tax Benefits for Senior Citizens and Super Senior Citizen in India

In India majority of older persons face financial hardship in old age as most of them are not in a position to earn their livelihood. Their savings, if any, are not enough to meet their day to day, particularly the medical expenses. Older persons with good net-worth value are in search of good short-term financial planning to earn a good income from their finance. The Income Tax law provides various benefits to senior citizens in India with the view to mitigate their issues.

The basic tax exemption limit for normal citizens below 60 years of age is Rs 2.5 lakh in a financial year. But for Senior Citizens, the exemption limit is Rs 3 lakh, while for Very Senior Citizens, the limit is Rs 5 lakh.

So, a Senior Citizen doesn’t have to pay any tax or file ITR in case the annual income is up to Rs 3 lakh and no TDS is deducted during the financial year. Similarly, a Very Senior Citizen is exempted from paying tax and filing ITR if his/her annual income is up to Rs 5 lakh and no TDS is deducted.

Who is considered as a Senior Citizen in India?

According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is considered as a Super Senior Citizen in India?

A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.

Deduction under Section 80TTB

Senior citizens receiving interest income from FDs, savings account and recurring deposits can avail income tax exemption of up to Rs 50,000 annually under Section 80TTB. This is by way of an amendment vide Finance Act 2018.

Specified income is any of the following income in aggregate:

  • Interest on bank deposits (savings or fixed);
  • Interest on deposits held in a co-operative society engaged in the business of banking, including a co-operative land mortgage bank or a co-operative land development bank; or
  • Interest on post office deposits

Deduction under Section 80D

Every individual or HUF can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. Not only can an individual take benefit by purchasing a health plan for themselves but also one can take advantage of buying the policy to cover their spouse, dependent children or parent. 

What is the quantum of deduction under Section 80D?

An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if parents are aged above 60. Let us refer to the table given below to understand this better:-

ScenarioPremium paid (Rs) for Self, family, childrenPremium paid (Rs) for ParentsDeduction under 80D (Rs)
Individual and parents below 60 years25,00025,00050,000
Individual and family below 60 years but parents above 60 years25,00050,00075,000
Both individual, family and parents above 60 years50,00050,0001,00,000
Members of HUF25,00025,00025,000

Is any deduction available w.r.t preventive health check up?

Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs 5,000, which is within the overall limit of Rs 25,000/Rs 50,000 as the case may be.

In conclusion, if you are a senior citizen you will get additional deduction of 25,000 than a normal individual under Section 80D.

Deduction under Section 80DDB

Section 80DDB includes tax deductions for specified diseases for individuals and HUF. Section 80DDB provides that if an individual or an HUF has incurred medical expenses for treatment of specified disease or ailment, such expense is allowed as deduction, subject to such conditions and capped at such amount as specified, under Section 80DDB of Income Tax Act.

What kind of medical treatments are allowed under section 80DDB?

Deduction under section 80DDB is allowed for medical expenses incurred for medical treatment of specified diseases or ailments. The nature of diseases and ailments which are included for deduction under Section 80DDB are mentioned in Rule 11DD of Income Tax which are as follows:

  • Neurological Diseases as identified by a specialist ,where the level of disability has been certified to be of 40% and above and covers Dementia, Dystonia Musculorum Deformans, Chorea, Motor Neuron Disease, Ataxia, Aphasia, Parkinson’s Disease and Hemiballismus.
  • Malignant Cancer
  • AIDS- Acquired Immuno-Deficiency Syndrome
  • Chronic Renal failure
  • Hematological disorders like Hemophilia or Thalassaemia.

What amount can be claimed as deduction under section 80DDB?

Age of the person who is availing medical treatmentAmount of deduction (Rs.)
Age less than 60 yearsRs.40,000 or actual expenses, whichever is less
Senior Citizens- Age 60 years and aboveRs.1,00,000 or actual expenses, whichever is less
Very Senior Citizens- Age 80 years and aboveRs.1,00,000 or actual expenses, whichever is less

Basically, an individual up to 60 years of age may claim deduction up to Rs 40,000 in a financial year u/s 80DDB on expenditures made on medical treatment of specified diseases or ailments of self or dependent relatives of below 60 years of age, while the limit is Rs 1 lakh for Senior Citizens and Very Senior Citizens.

No Advance Tax

While ordinary individuals have to pay an advance tax if their tax liability is Rs.10,000 or more in a financial year, senior citizens are free from this burden unless they make income under the head ‘Profits and Gains from Business or Profession’. Those not owning a business only have to pay the Self-Assessment Tax.

Offline filing of ITR

Super Senior Citizens (individuals above 80 years) can file for their Income Tax Return through either ITR-1 (Sahaj) or ITR-4 (Sugam). They can choose to do it either manually or electronically, while no other assessee can file Offline Returns.

No tax under the Reverse Mortgage Scheme

A senior citizen may reverse mortgage any of his accommodation to make monthly earnings. The ownership of the property remains with the senior citizen and they are given monthly payments for it. The amount paid in instalments to the owner is exempted from Income Tax.

Thanks to attractive tax deductions and benefits, the Income Tax Law has provided an advantageous position for senior citizens in India.

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