INCOME TAX BENEFITS FOR SENIOR CITIZEN

INCOME TAX BENEFITS FOR SENIOR CITIZEN

  1. At what age a person will qualify as a senior citizen and very senior citizen under the Income tax law?

​​Before understanding the age criteria, it is very important to know that the tax benefits offered under the Income-tax Law to a senior citizen/very senior citizen are available only to resident senior citizen and resident very senior citizens. In other words, these benefits are not available to a non-resident even though he may be of higher age. The age and other criteria to qualify as a senior citizen and very senior citizen under the Income-tax Law are as follows:

Criteria for senior citizen     Criteria for very senior citizen
Must be of the age of 60 years or above but less than 80 year at any time during the respective year. Must be of the age of 80 years or above at any time during the respective year
Must be resident Must be resident

 

  1. What are the Benefits available to a senior citizen and very senior citizen in respect of tax rates?

​​​Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal tax payers. Exemption limit is the quantum of income up to which a person is not liable to pay tax. The exemption limit granted to senior citizen and very senior citizen for the financial year 2019-20 is as follows

Senior Citizen Very Senior Citizen
A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2019-20 available to a resident senior citizen is ₹. 3,00,000. The exemption limit for non-senior citizen is ₹. 2,50,000. Thus, it can be observed that an additional benefit of ₹. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal tax payers. A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2019-20 available to a resident very senior citizen is ₹.5,00,000. The exemption limit for non-senior citizen is ₹.2,50,000. Thus, it can be observed that an additional benefit of ₹.2,50,000 in the form of higher exemption limit is available to a resident very senior citizen as compared to normal tax payers.

 

  1. Is there any special benefit available under the Income tax law to senior citizens?

From Assessment year 2019-20 onwards, a very senior citizen filing his return of income in Form ITR 1/4 can file his return of income in paper mode, i.e., for him e filing of ITR 1/4 (as the case may be) is not mandatory. However, he may go for e-filing if he wishes.

  1. Is a Resident senior citizen granted exemption from payment of advance tax?

​​​​​​​As per section 208, every person whose estimated tax liability for the year is ₹.10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, section 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207, resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

  1. What are the benefits available in respect of interest on deposits in case of senior citizens?

​​​​​​ Section 80TTB ​of the Income Tax law gives provisions relating to tax benefits available on account of interest income from deposits with banks or post office or co-operative banks of an amount upto ₹.50,000 earned by the senior citizen (i.e., an individual of the age of 60 years or above). Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.

Section 194A of the Income Tax law gives corresponding provisions that no tax shall be deducted at source from payment of interest to a senior citizen up to ₹.50,000.

  1. What are the benefits available in respect of expenditure incurred on account of medical treatment of specified diseases on treatment of a senior citizen?

​​​​​​Section 80D​DB of the Income-tax Law gives various provisions relating to tax benefits available on account of expenditure on medical treatment of specified diseases or ailment  (prescribed by the Board, see rule 11DD of Income Tax Rules, 1962). In case of an individual, the aforesaid expenditure should be incurred on medical treatment of an individual or wholly/mainly dependent spouse, children, parents, brothers and sisters of the individual.

The tax payer has to obtain the prescription for the medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed

Amount of Deduction:

(a) amount actually paid on medical treatment specified above; or

(b) ₹.40,000.

However, the limit of Rs. 40,000 will be increased to ₹.1,00,000, if the expenditure is incurred on medical treatment of a senior citizen.

The taxpayer should obtain a copy of certificate (Form No. 10-I) issued by a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital.

  1. What are the benefits available in respect of expenditure incurred on account of medical insurance premium/ medical expenditure to a senior citizen and on account of?

​​​​​​​​ Section 80D of the Income-tax Law gives various provisions relating to tax benefits available on account of payment of medical insurance premium and other related items. In case of an individual, deduction is available in respect of medical insurance policy taken in his own name, or in the name his/her spouse, his/her parents and his/her dependent children.

Deduction on account of medical expenditure shall be allowed only when it is incurred on the health of the aforementioned persons who are senior citizens

The below table captures the quantum of deduction available to an individual/HUF taxpayer under various scenarios:

Scenario Premium Paid Deduction under 80D
  Self, Spouse, children Parents
Individual and parents below 60 years 25,000 25,000 50,000
Individual and family below 60 years but parents above 60 years 25,000 50,000 75,000
Both individual, family and parents above 60 years 50,000 50,000 1,00,000
Members of HUF 25,000 25,000 25,000
Non-resident individual 25,000 25,000 25,000

Compiled By Joel A. D”Souza

Date : 08.01.2020