Income Tax Benefits for Senior Citizens

Whether we like it or not, we all worry about the future and considerably make choices to save and invest money so that we can have a secure tomorrow. Consequently, a lot of what we do today help contribute to not only our growth, but the country’s overall growth too.

That’s right, we are talking about the percentage of our earnings that go towards our responsibility of paying income taxes to the government. 😉 Without even realizing it, we do this for a long time, up to until the grey strands become more apparent.

However, don’t you think there should be some income tax benefits for seniors who’ve already given a lot in the younger days? Let’s get straight into it to talk about some of these benefits, a.k.a Income Tax Benefits for Senior Citizens.

Who is Considered as a Senior Citizen in India?

According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.

Who is Considered as a Super Senior Citizen in India?

A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.

Why should Senior Citizens have special Income Tax Benefits?

India’s history hails from a culturally enriched background where elders are paid respect and love. They are taken care of to guide the generations on both happy and odd events.

The government working in tandem to keep the culture and moral values intact offer special income tax benefits for senior citizens. Their idea is to relieve them from stress at this phase of life. If you or your senior citizen parents are planning their funds, then it is crucial to know about the tax benefits for senior citizens that can be availed.

8 Special Income Tax Benefits for Senior Citizens

Here are some of the deductions and benefits which may ease out financial responsibilities for senior citizens.

1. Benefits under Medical Insurance

Under section 80 D, the senior citizens are offered a benefit on account of payment of the health insurance premium up to Rs.50,000/-. Earlier, this limit of deduction for health premium payment was Rs.30,000/- for senior citizens.

For super citizens, under section 80 D, the deduction for the payment of medical premium as well as the actual expenses incurred on their treatment are allowed.

Old age is the time when people above 60 or 80 years would need a lot of money for their treatment as well. Giving them a deduction benefit under Income Tax is a great way to offer some amount of support and help.

2. The Elementary Exemption Benefit

Every individual in India, who falls under the income bracket to pay tax, is allowed for some elementary waivers.

While for the senior citizens, the government has set up this basic exemption limit up to Rs.3 lakhs. For the next 3 lakhs-5 lakhs slab, a senior citizen will have to pay a tax of 5%.

Super citizens get a higher advantage, considering their income and age. For them, this waiver is of up to Rs.5,00,000 in one financial year.

Other than the senior or super citizens, this exemption for ordinary citizens is up to Rs.2,50,000/- only which leads them to pay more taxes.

3. Privilege on Interest Income

The senior citizens who are residents of India will have to pay no tax on their interest earned up to Rs.50,000/- in a financial year.

Applicable under section 80 TTA of Income Tax, this will take into account interest earned in the savings bank account, deposits in a bank, and/or deposits in post-office.

When filing their Income Tax Return, the senior citizens will have to fill the form 15H. The amount of interest earned over Rs.50,000/- would attract the tax as per the slab rate of senior citizens.

4. No Advance Tax

While ordinary individuals have to pay an advance tax if their tax liability is Rs.10,000/- or more in a financial year, senior citizens are free from this burden unless they make income from business or profession. Those not owning a business only have to pay the Self-Assessment Tax.

Advance Tax is an amount paid in advance to the Indian Government which all citizens are bound to pay. Bringing senior citizens in the same bracket isn't essentially fair.

5. Allowance on the treatment of specified diseases

The Government of India gives an allowance to its ordinary citizens to not pay tax if the cost of treatment is close to Rs.40,000/-

Under section 80DDB of the Income Tax, senior citizens get a deduction limit of Rs.1 lakh if they undertake any treatment for specified disease/critical illness in a financial year.

6. Income Tax Return benefits

Super Senior Citizens (individuals above 80 years) can file for their Income Tax Return through either Sahaj (ITR 1) or Sugam (ITR 4). They can choose to do it either manually or electronically.

7. No tax under the Reverse Mortgage Scheme

A senior citizen may reverse mortgage any of his accommodation to make monthly earnings. The ownership of the property remains with the senior citizen and they are given monthly payments for it. The amount paid in instalments to the owner is exempted from Income Tax.

8. Standard Deductions from Pension Income

Senior citizens are allowed a standard deduction of ₹50,000 on account of their pension income.

Income Tax Slabs for Senior Citizens - Financial Year 2019-20

Income tax slabs	Rate of tax	Health and Education Cess
Income up to ₹3 lakh*	No tax	NA
Income between ₹3 lakh and ₹5 lakh	5%	4% of income tax
Income between ₹5 lakh and ₹10 lakh	20%	4% of income tax
Income that exceeds ₹10 lakh	30%	4% of income tax

Income Tax Slabs for Super Senior Citizens (more than 80 years of Age) - Financial Year 2019-20

Income tax slabs	Rate of tax	Health and Education Cess
Income up to ₹5 lakh*	No tax	NA
Income between ₹5 lakh and ₹10 lakh	20%	4% of income tax
Income that exceeds ₹10 lakh	30%	4% of income tax

Surcharge if total income is more than Rs.50 lakh and up to Rs.1 crore: 10% of income tax
Surcharge if total income exceeds Rs.1 crore: 15% of income tax

FAQs about Tax Benefits for Senior Citizens

✓ What is the standard deduction for senior citizens?

As per the latest changes in the Income Tax Act, the standard deduction for senior citizens is ₹50,000.

✓ What is the maximum age for Senior Citizens to pay income tax?

This is not dependent on age but, the basic income of the respective senior citizen (this includes rent allowances, fixed and other sources of income). However, the exemption limit is higher for senior and super senior citizens; ₹3 lakh and ₹5 lakh respectively.

✓ What is the health insurance tax benefit limit for senior citizens?

As per the Section 80D of the Income Tax Act, senior citizens can get a tax benefit of up to ₹55,000 (this includes annual health checkups) if they have opted for a valid health insurance plan and are paying the annual premium required for the same.

✓ How much a senior citizen can earn tax free?

A senior citizen can earn tax-free income up to ₹3 lakh and super senior citizens above 80 years can earn tax-free income to up to ₹5 lakh.