The Indian Income Tax Act attempts to make income tax e-filing hassle-free while also providing some tax incentives to senior citizens. This page compiles a comprehensive overview of all the tax benefits accessible to older folks. (Special Tax Benefits For Senior Citizens)
Who qualifies as a senior citizen for tax purposes?
Senior Citizens fall into two groups for income tax purposes.
- Senior citizens are those who are above 60.
- Super Senior Citizens: Individuals over the age of 80
Benefits from taxes for seniors
1. Advantages of Flat Rates
When compared to non-senior citizens, senior citizens’ income tax slab rates are different. The following are the slab rates.
This translates into a tax savings of Rs. 5000 for senior citizens and Rs. 30,000 for super senior citizens because the slab rates are advantageous to senior citizens. Refer to Income Tax Slab Rates for a comprehensive list of income tax slabs.
2. Interest income up to Rs. 50,000 is excluded.
A new Section 80TTB has been added with effect for the 2018–19 fiscal year, allowing for a Rs. 50,000 interest deduction. The Slab Rates for Senior Citizens will apply to any income received exceeding Rs. 50,000.
For instance, if a senior gets an interest income of Rs. 75,000, Rs. 50,000 would be eligible for a deduction under Section 80TTB, while the remaining Rs. 25,000 would be subject to slab rates of taxation.
It is crucial to remember that in these circumstances, the Rs. 10,000 deductions for interest on savings accounts under Section 80TTA would not be permitted.
3. Section 80D deductions for medical insurance premium payments
For non-senior people, section 80D allows a deduction of Rs 25,000 for the cost of medical insurance premiums. But for senior citizens, this deduction rises to Rs. 50,000. (increased from Rs. 30,000 to Rs. 50,000 in Budget 2018 and applicable from 1st April 2018)
Additionally, deductions under Section 80D are permitted for the real costs spent by very senior citizens for treatment in the event of very senior citizens, defined as those above the age of 80.
Read this for more information: Medical Insurance Premium Tax Deduction
4. Not need to pay advance tax
Seniors without company income are free from any Advance Tax and just have to pay Self Assessment Tax on their entire income (Inserted by Finance Act 2012)
5. Interest is not subject to TDS.
If a senior citizen’s whole income is excluded from income tax collection and he owes no tax for that fiscal year, he may submit Form 15H for non-deduction of TDS on Interest on Fixed Deposit.
Senior citizens may submit this form if their total income after deductions is less than the minimum amount exempt from taxation, but non-senior citizens may submit this form if their total income is less than the minimum amount exempt from taxation before deductions.
Because the benefit is larger for senior citizens, Form 15H must be submitted in their situation rather than Form 15G in the case of non-senior citizens.
Senior persons now qualify for tax deductions under Section 194A at a higher level than before, up from Rs. 10,000 to Rs. 50,000. This change was made in Budget 2018 and will take effect in FY 2018–19.
6. Increased Section 80DDB Deduction for a disease-specific affliction
An assessee may claim a deduction under Section 80DDB for expenses incurred in the medical treatment of certain conditions. Previously, this clause permitted a deduction of Rs. 60,000 for senior citizens and Rs. 80,000 for super-senior citizens.
With effect from FY 2018–19, this has been raised to Rs. 1,000,000 for both senior and super senior citizens. [Amendment proposed in light of Budget 2018]
7. No tax is due on money received via the reverse mortgage program
A home loan that is reversed is a reverse mortgage. You get ownership of the home after making EMI payments to the bank under a home loan. In accordance with the reverse mortgage program, older citizens get recurring payments for the rest of their lives by mortgaging their homes, even if they continue to own and live in them.
According to the Reverse Mortgage Scheme, after the borrower’s passing, the loan and accrued interest are paid off through the sale of the home, with the remaining proceeds going to the borrower’s legal heirs.
The money so paid to the senior citizen in installments is completely free from income tax collection.
Senior citizens receiving pension income will be able to deduct a standard deduction of Rs. 40,000 starting with the financial year 2018–19.
Read More Article
- Stocks Vs Mutual Fund, Which one is better?
- Advantages and disadvantages of Credit Card
- Stock Markets Vs Share Markets
- What is a cryptocurrency and how does it work?
- How to improve your credit score rapidly
- How to choose the right credit card for you.
- Different types of loans in India
- Term Insurance and ULIP: What is the differences and their benefits
- According to Dow Jones Futures, Bear Market Eyes New Leg Down; Apple, Eli Lilly Show Relative Strength
- How to survive the worst bear market of all time
- Wall Street landmark: ETF popularity reaches record levels
- Benami Transactions (Prohibition) Act, 1988
- Asset Disclosure in Income Tax Returns Is Required
- Employee Provident Fund (EPF), EPS and EDLIS
- Stock market – Wikipedia