Income Tax Benefits for Senior Citizens

Here’s a list of tax benefits, exemptions, and deductions available under the Income Tax Act for senior and super senior citizens:

Basic Exemption Benefit

Each individual under the income tax bracket in India is offered some basic tax exemptions. The current tax exemption for ordinary taxpayers is ₹2.5 lakh under the old tax regime and ₹3 lakh under the new regime.

However, the senior citizen tax exemption limit is ₹3 lakh under both regimes. Super senior citizens, on the other hand, enjoy higher exemptions. For them, the exemption limit is up to ₹5 lakh under the old tax regime and up to ₹3 lakh under the new regime.

Deductions for Interest Earned

Individual taxpayers other than senior citizens can avail of a maximum deduction of ₹10,000 under Section 80TTA of the Income Tax Act for the interest earned from savings bank accounts.

However, the deduction on tax for senior citizens is up to ₹50,000 under Section 80TTB of the Income Tax Act. This exemption is available not only on savings bank accounts but also on the interest income from any bank deposit or deposits with a post office or cooperative bank. If the interest income is less than ₹50,000 during a year, the bank or post office does not deduct any tax.

Medical Insurance Benefits

Under Section 80D of the Income Tax Act, the income tax rebate for sr citizens is up to ₹50,000 for health insurance premiums. This deduction can also be claimed for expenses incurred on a senior citizen’s health, provided no sum is paid for their health insurance.

However, to claim the 80D limit for senior citizens, the premium or medical expenses must be paid through any mode other than cash. For ordinary citizens, the deduction limit is ₹25,000.

Exemption from Payment of Advance Tax

Taxpayers whose income tax liability is ₹10,000 or above in a financial year must pay an advance tax. However, senior citizens are exempted from paying this tax if they do not earn an income from a business or profession.

Exemptions from Filing Income Tax Return (ITR)

Senior citizens aged 75 years and above enjoy exemption from filing their ITR if they:

Earn income from pension only.

Receive the pension and interest amount in the same bank account.

Furnish the 12BBA declaration form to the specified bank.

Income Tax Return Benefits

Senior citizens above the age of 80 years are allowed to file their ITR through Sahaj (ITR 1) and Sugam (ITR 4) either manually or electronically.

Benefits of Standard Deductions from Pension Scheme

The std deduction for senior citizens on their pension income is ₹50,000 under Section 16 of the Income Tax Act.

Tax Benefits Under the Reverse Mortgage Scheme

Senior citizens who transfer their residential property under the Reverse Mortgage Scheme and receive monthly instalments are exempted from paying any capital gains tax.

Deductions for Medical Treatment of Specified Diseases

Ordinary taxpayers can claim a tax deduction of ₹40,000 for expenses incurred to treat specified ailments of self or dependent relatives. However, the deduction is ₹1 lakh if the expenses are incurred on the treatment of a senior or super senior citizen under Section 80DDB of the Income Tax Act.

Taxes are a crucial source of funds for the government. However, it is also true that taxes can take a significant portion of a taxpayer's income. This is where tax planning comes into play. Tax planning allows you to reduce your tax liability by using tax exemptions, deductions and benefits as much as possible.

Medical insurance is one of the ways through which you can reduce your tax burden. The premium you pay for health insurance can be used as a tax deduction under Section 80D of the Income Tax Act (subject to limits). You can avail of this deduction on premiums paid for yourself, your dependent parents, spouse, and children.

However, health insurance offers more financial protection than mere tax savings. This is why it is important to pick the best health insurance plans for your family’s well-being. Tata AIG offers affordable individual health insurance, senior citizen health insurance, family floater health insurance, and many other plans. So don’t delay! Choose the most suitable health insurance plan for yourself and your loved ones today to ensure financial security against medical bills.

How much income is tax-free for senior citizens?

Senior citizens are not required to pay any tax up to an income of ₹3 lakh under both tax regimes. This limit is ₹5 lakh for super senior citizens under the old tax regime and ₹3 lakh under the new regime.

What is the TDS exemption for senior citizens?

Under Section 194A of the Income Tax Act, there is no Tax Deducted at Source (TDS) on the payment of interest of up to ₹50,000 by a bank, cooperative bank, or post office to senior citizens over the age of 60 years.

How can senior citizens avoid taxes in India?

There are several investment tools through which senior citizens can avoid taxes in India. Here’s a list of a few of them:

Life and health insurance premiums

Public Provident Fund (PPF)

National Pension Scheme (NPS)

Pradhan Mantri Vaya Vandana Yojana

Tax-free bonds

Tax-saving fixed deposits

Equity Linked Savings Scheme (ELSS) Mutual Funds

What is 80C deduction for senior citizens?

80C deduction for senior citizens can be claimed for life insurance premiums, ELSS, tax-saving fixed deposits, National Pension Scheme, Public Provident Fund, Senior Citizens Savings Scheme and more.