Income Tax Benefits for Senior citizens

Definition of Senior Citizen-

A person becomes senior citizen under Income Tax Act after attaining age of 60 even for one day. Once he attains 60 years, his status as senior citizen in that financial year and a person whose age is 80 years he becomes super senior citizens. “Senior Citizen” has been defined under Income Tax Act, as an individual resident in India who is the age of 60 years or more at any time during the previous year. “Super Senior Citizen” has been defined under Income Tax Act, as an individual resident in India who is of the age of 80 years or more at any time during the previous year.

Benefits for Senior Citizens-

  1. Increase in Basic Exemption Limit – Under Income Tax Act, basic exemption limit has increased for Senior citizens up to Rs. 3,00,000 or for Super Senior Citizens up to Rs. 5,00,000, means Senior citizens having income up to Rs. 3,00,000 there is no tax liability or for Super Senior Citizens having income up to Rs. 5,00,000 they have also not to pay any income tax. Example 1- Mr. X, age of 62 years having total income of Rs. 2,95,000 during the financial year 2018-19. What is his tax liability for the financial year 2018-19? Answer- Mr. X is senior citizen so the basic exemption limit under Income tax is allowed up to Rs. 3,00,000. Therefore Mr. X has No Tax Liability for the financial year 2018-19. Example 2- Mr. X, age of 82 years having total income of Rs. 4,80,000 during the financial year 2018-19. What is his tax liability for the financial year 2018-19? Answer– Mr. X is super senior citizen so the basic exemption limit under Income tax is allowed up to Rs. 5,00,000. Therefore Mr. X has No Tax Liability for the financial year 2018-19.
  2. Increase an amount of deduction under section 80D – Under section 80D, the deduction is allowed for premium paid on health insurance and health check is allowed up to Rs. 50,000 for senior citizens. EXAMPLE- 3 If, Mr. Ramesh age of 55 years, pays medical insurance premium of Rs. 28,000/- on his health and health of his wife and dependent children and pay Rs. 42,000/- on the health of his parents which are senior citizens. What will be the amount of deduction under section 80D during the financial year 2018-19? Answer: – Mr. Ramesh would be eligible for a deduction under section 80D for Rs. 67,000/- (Rs. 25,000 + Rs. 42,000) during the financial year 2018-19. In such case where assessee is not senior citizen while his parents are senior citizens, so the deduction is allowed Rs. 25,000 in respect of his family and Rs. 50,000 in respect of insurance of their parents. Preventive Health checkup covered under section 80D – Preventive health checkup expenses to the extent of Rs 5,000/- can be claimed as tax deductions. Keep in mind, this is not over and above the individual limits. Example 4 – If, Mr. Samir (65 years) has a Mediclaim policy and paid Rs 55,000 as premium. He also spent Rs 8,000 towards health check-up. What will be the deduction amount under section 80D? Answer- Mr. Samir is a senior citizen, he can claim deduction to the extent of Rs 50,000 only under Section 80D. Even he has paid Rs. 63,000/- (Rs. 55,000+ Rs. 8,000). The deduction of health checkup is included in tax deduction slab. Special deduction for Super Senior Citizens under section 80D – If you or any member of your family or either of your parents is a super senior citizen (i.e. 80 years or above in age) but is not covered under any health insurance, you can still get a tax deduction of Rs. 50,000 (w.e.f. 2018-19). The deduction is allowed for medical expenses.
  3. Increase an amount of deduction under section 80DDB – Under Section 80DDB, the deduction is allowed for actual expenses incurred on medical treatment of specific diseases or Rs. 1,00,000 whichever is lower. Example 5- During the financial year 2018-19, Mr. X spent Rs. 90,000 on medical treatment of specified diseases of his father with the age of 65 years. He has received Rs. 35,000 by way of reimbursement of such expenditure from a medical insurance policy. Can he claim any deduction in respect of expenditure incurred by him on medical treatment of specified diseases under section 80DDB? Answer– Mr. X can claim deduction under section 80DDB of Rs. 55,000 [i.e., Rs. 90,000 (Maximum limit of Rs. 1,00,000 or Actual Expenses of Rs. 90,000 whichever is less) – Rs. 35,000 reimbursement from a medical insurance policy]. Example 6- During the financial year 2018-19, Mr. X spent Rs. 1,20,000 on medical treatment of specified diseases of his father with the age of 65 years. He has no medical insurance policy. What amount can he claim for deduction in respect of expenditure incurred by him on medical treatment of specified diseases under section 80DDB? Answer– Mr. X can claim deduction under section 80DDB of Rs. 1,00,000 (i.e. Maximum limit of Rs. 1,00,000 or Actual Expenses of Rs. 1,20,000 whichever is less)
  4. Increase an amount of deduction under section 80TTB – Under Section 80TTB, the Interest earned from banks, cooperative societies or post offices under Saving accounts/Fixed Deposits/Recurring Deposits etc. is exempted up to Rs. 50,000.
  5. Increase to invest money under Pradhan Mantri Vaya Vandana Yojna – The Investment limit under Pradhan Mantri Vaya Vandana Yojana has increased up to Rs. 15,00,000. The limit on maximum investment has now revised to per senior citizen (and not per family). So now in a family if both husband and wife are senior citizen. Both can invest 15 lakhs each as purchase price (total 30 lakhs)
  6. Non-Deduction of TDS on Interest under section 194A – If the total taxable income of any person who is senior citizen not exceeding their basic exemption limit they can file form 15H for non-deduction of TDS on Interest to any banks or post offices.
  7. Standard Deduction – If any person who is senior citizen having income from pension can claim standard deduction of Rs. 40,000.
  8. Exemption from payment of Advance Tax – If any person who is senior citizen, is exempted from payment of advance tax if they do not have income under the head “Income from business or professions”. They have to pay their tax liability at the time of filing or their income tax return.