According to a poll conducted by Clear (previously ClearTax), a provider of e-filing ITR services, just about 7% of senior adults in India had utilized their 80C and 80D tax deduction limits for this year under the Income Tax Act of 1961.
Here we explore how the Act defines a senior citizen and what benefits it offers them.
Who Is A Senior Citizen Under The Income Tax Act?
According to the Act, a senior citizen is someone who has reached the age of 60 but is under 80, and a super senior citizen is someone who has reached the age of 80.
According to their date of birth, the following table displays the status of senior or super senior citizens.
Tax reductions and additional advantages for seniors:
Deductions Under Section 80DDB
The Income Tax Act offers an increased deduction limit for specific medical treatments for oneself, dependent family, or dependent senior people, according to Naveen Wadhwa, deputy general manager (DGM) of Taxmann, a book publishing firm with headquarters in Delhi.
A deduction for costs incurred for such medical treatment is permitted under Section 80DDB.
The maximum deduction is Rs 40,000 for dependent family members; the maximum deduction is Rs 1,000,000 for dependent senior persons.
Deductions Under Section 80D
Senior citizens may use the 80D benefits of the Income Tax Act for medical costs and health insurance premiums, according to Divya Baweja, a partner at Deloitte India.
For people who are not senior citizens, the maximum deduction is Rs 25,000, which includes Rs 5,000 for a preventive health checkup. The medical insurance premium for seniors is Rs 50,000.
Additionally, if the individuals are senior citizens and their parents are senior citizens or super senior citizens, they are eligible to claim Rs. 50,000 for themselves and Rs. 50,000 for their parents as premium reimbursement.
However, Section 80D allows for a deduction of up to Rs 50,000 in cases where a person does not have health insurance but still has medical expenses.
This specific deduction (Rs 50,000) for medical expenses of a senior citizen is only available to them, according to Ajay Chandiramani, a finance expert and senior guide of GetSetUp, a platform for older adults to learn and share new skills. This benefit is therefore unavailable to non-senior citizens. Additionally, the total deduction allowed under section 80D cannot exceed Rs.
Deductions Under Section 80DDB
Subject to a few restrictions, Section 80DDB provides a deduction for medical costs associated with a certain ailment. The expenses must be incurred for the care of oneself, one’s dependent spouse, one’s children, one’s parents, and one’s siblings.
According to Baweja, the deduction is only permitted for up to Rs. 1,00,000 for senior people and up to Rs. 40,000 for non-seniors.
Section 80 TTB Deductions
Senior persons may deduct interest income received from a bank, post office, or cooperative bank under Section 80 TTB. It provides a deduction of up to Rs 50,000 for savings and time deposits like recurring and fixed deposits during a fiscal year.
Non-senior citizens may deduct up to Rs 10,000 in interest on savings accounts under Section 80 TTB, according to Baweja.
Other Tax Benefits For Senior Citizens
Advance Tax Payment is not required if there is no business or professional income.
Every citizen who owes income tax for the year in excess of Rs 10,000 is required to pay advance tax. However, if senior citizen does not have any income falling under the category of profits and earnings from a trade or profession, they are not obligated to pay advance tax (PGBP).
Higher Cap on TDS on Bank/Post Office Interest Payments
A higher cap on TDS deduction from interest paid by a bank or post office, including cooperative banks, is provided by Section 194A of the Income Tax Act. The cap is Rs 50,000 for seniors and Rs 40,000 for everyone else. Beyond this point, interest payments are subject to TDS deduction.
Exemption From Filing ITRs for Certain Senior Citizens
According to Section 194P of the Act, a senior citizen who was 75 years of age or older in the previous year is eligible for an exemption when filing an ITR as long as they meet certain requirements, such as completing a specific form and only receiving pension and interest income from the same bank.
He should get both his pension and interest income from the same bank, and elderly citizens who meet this need must fill out Form No. 12BBA and submit it to the bank. If all of the aforementioned requirements are met, the bank will be required to withhold tax under Section 194P at the corresponding slab rate, according to Wadhwa.
Read More: Sale of House Property by NRI- Tax Implications & Fund Repatriation Checks
Increased Tax Slab Exemption Cap
It is Rs. 2,50,000 for typical individual taxpayers. However, senior citizens receive a higher exemption of Rs 3,000, while super senior citizens receive a higher exemption of Rs 5,000.