Our Income Tax act identifies a person as senior citizen if he or she is 60 years of age or more at any time during the financial year or previous year. Earlier this limit was 65 years, now recently government of India has reduced it to 60 years.
Government of India has also introduced another concept called super senior citizen. As per Income Tax act, if a person is 80 years of age or more during the previous year then he or she will be considered as super senior citizen.
As per Income Tax act, senior and super senior citizens can take advantage of additional income tax benefits that are specifically available to them. Followings are the IT benefits that are specifically available to these peoples.
Income Tax exemption for senior citizen
General tax exemption limit up to which a person is not liable to income tax is Rs. 2, 00,000. But government of India has allowed a higher income tax exemption for senior citizen and super citizen. As per Income Tax provisions, a senior citizen will not be liable to income tax up to the income of Rs. 2, 50,000. Similarly, a super senior citizen will not liable up to Rs. 5, 00,000.
Lessor Tax rate for senior citizen
Income Tax rate applicable to a senior and super senior citizen has also been relaxed compare to a normal citizen of India who does not fall in to these categories. A normal citizen (who is not a senior citizen) starts paying income tax at the rate of 10% after his or her income exceeds Rs. 2, 00,000 and then the rate of tax increases once the income touches Rs. 5, 00,000, which again gets increased by another 10% after income reaches Rs. 10, 00,000.
But in the case of senior citizens the 10% rate starts when income touches Rs. 2, 50, 000. And then it’s charged at the rate of 20% on incomes between Rs. 5, 00,000 to Rs. 10, 00,000 and at the rate of 30% after Rs. 10, 00,000. For super senior citizen 10% rate is not applicable.
Income Tax deduction for medical insurance premium – Section 80D
Section 80D allows Income Tax deduction for medical insurance payment. Normal tax deduction under this section is Rs. 15, 000. However senior and super senior citizen can claim benefits of income tax deduction up to Rs. 20, 000.
If a non senior citizen is making payment of medical insurance premium to ensure their parent’s medical treatment then they are eligible for this higher IT deduction. The requirement of claiming this higher Income tax deduction is that you should make payment for your parents who should be a senior citizen.
No Advance Tax Payment
With the introduction of finance act, 2012, now it’s not necessary for a senior or super senior citizen to pay advance tax if they do not have income from business or profession. In case they are liable to income tax then they are required pay income tax at the end of the previous year after assessing their income.
Higher Income Tax deductions for specified disease
Section 80DDB allows deduction of Rs. 40, 000 if any expenses are incurred for treatment of specified disease. If such expenses are incurred for a senior or super senior citizen then deduction can be claimed up to Rs. 60, 000. Like in the case of section 80D, in this section also it’s not mandatory that the senior citizen should spend it. You can also spend if they are your parents and claim higher Income Tax deductions in your return.
Like in the case of ordinary person, a senior citizen can also take benefits of not deducting income tax from their interest on fixed deposits by submitting form 15H to the concerned person. With these benefits one should also consider investing in different investment plans as one of the option to get IT benefits.