Here are 8 Income Tax Benefits for Senior Citizens:
1. The elementary exemption benefit
For senior citizens, the government has increased this basic exemption limit up to ₹3 lakhs under both tax regimes, effective April 1, 2023.
Super citizens get a higher advantage, considering their income and age. For them, this waiver is of up to ₹5 lakhs under the old tax regime in one financial year. Under the new regime, however, the basic exemption limit is up to ₹3 lakhs.
Other than the senior or super citizens, this exemption for ordinary citizens is up to ₹2,50,000/- only, which leads them to pay more taxes.
2. Benefits under medical insurance
The maximum limit for deduction u/s 80D in respect of payment made for health insurance premium in respect of a senior citizen has been allowed at Rs. 50,000 as against that allowed to other individuals at Rs. 25,000. Deduction upto Rs. 50,000 is also allowed for medical expenses incurred on the health of a Senior Citizen provided no amount is paid for health insurance of such person.
3. Privilege on interest income
Senior citizens who are residents of India will have to pay no tax on their interest earned up to ₹50,000 in a financial year.
Applicable under section 80TTB of Income Tax, this will consider interest earned in the savings bank account, deposits in a bank, and/or deposits in the post-office. When filing their Income Tax Return, senior citizens must fill the form 15H.
Also, Section 194A provides senior citizens with the benefit of a higher TDS deduction on interest payments of up to ₹ 50,000 by the bank, post office or cooperative bank. This limit is ₹ 40,000 for non-senior citizens.
4. Exemption from filing ITR
Budget 2021 introduced a Section 194P, under which senior citizens aged 75 and above are exempted from filing the ITR if they fulfil the following criteria:
- They have income only from their pension.
- They receive income from interest and pension in the same bank account.
- They have furnished a declaration form 12BBA to the specified bank.
5. No advance tax
While individuals below the age of 60 have to pay an advance tax if their tax liability is ₹10,000 or more in a financial year, senior citizens are free from this burden unless they make income from business or profession.
6. Allowance for the treatment of specified diseases
The Indian government allows individual taxpayers and dependent relatives below the age of 60 not to pay tax if medical treatment costs close to ₹40,000.
For dependent senior and super senior citizens, this deduction limit is up to ₹1 lakh if they undertake any treatment for a specified disease/critical illness in a financial year, as per Section 80DDB of the Income Tax Act.
7. No tax under the Reverse Mortgage Scheme
Senior citizens may reverse mortgage on any of their accommodations 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.
8. Standard deductions from pension income
Senior citizens are allowed a standard deduction of ₹50,000 for their pension income, including family pensioners who can avail of deduction benefits up to Rs 15,000.