FY 2020-21: 6 Income Tax Benefits For Senior Citizens
Posted On March 5, 2021
India’s income tax legislation provides certain advantages for retirees and as per the regulations, a resident senior citizen of India falls under the age group of 60 years and 80 years and very poor citizen above 80 years of age are able to reap tax benefits under the Section 80C of the Income Tax Act. According to the income tax act, tax benefits vary from higher exemption limit to deductions for resident senior and very senior citizens across the country
Any person who has a taxable income above the tax-free limit or who has earned any income from which tax was deducted at source (TDS) must file his / her return on income tax (ITR). Furthermore, senior citizens and very poor citizens are allowed to get additional tax benefits as compared to individuals under the age of 60.
Below listed are some additional tax benefits allowed for Senior and Very Senior Citizens: 1. Tax exemption threshold: Higher exemption threshold is provided for senior citizens and very senior citizens relative to ordinary taxpayers or taxpayers who are not senior citizens. For FY 2020-21, a senior citizen’s exemption cap is Rs 3 lakh. For the non-senior citizen, the exemption cap is Rs 2.5 lakh. A resident senior citizen gets an extra benefit in the form of Rs 50,000 and a higher exemption cap of Rs 5 lakh is given to very senior citizens. 2. Advance tax deduction: According to section 208 of the Income Tax Act, any individual whose approximate tax liability is Rs 10,000 or more for the financial year will pay the tax in advance in the mode of ‘advance tax.’ Similarly, section 207 of the Income Tax Act offers certain exemption from payment of advance tax to senior and very senior citizens.
3. Offline mode of ITR filling: Very senior citizens can file their income tax return through offline mode. Which means that online filing of ITR-1 (Sahaj) and ITR-4 (Sugam) is not obligatory for very senior citizens. 4. Tax exemption benefits for interest earned on bank deposits: Senior citizens are eligible for deduction under Section 80TTB of IT Act for interest accrued on deposits made with banks or post office or co-operative banks for an amount up to Rs 50,000. Please note that this threshold of Rs 50,000 has to be assessed independently for each bank.
5. Tax exemption benefits for paying insurance premium: Senior citizens are permitted to claim a medical insurance premium paid up to Rs 50,000 in a year as a deduction under section 80D of the Income Tax Act. In case a senior citizen also covers medical insurance premiums for his / her parents who also falls under the category of senior citizens as per the age group then they are allowed to claim an additional deduction of up to Rs 50,000.
6. Tax exemption benefits on medical services: Pursuant to section 80DDB of the Income Tax Act, a senior citizen taxpayer may request a tax deduction of up to Rs 1 lakh for costs accumulated in the medical care.