Herald: Special Income Tax benefits for Senior Citizens
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Special Income Tax benefits for Senior Citizens

25 Jun 2018 03:45am IST

Report by
Prabhu Verlekar

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25 Jun 2018 03:45am IST

Report by
Prabhu Verlekar

‘Senior Citizens’ is a respectable title bestowed under Income Tax Act 1961, when you complete 60 years age along with certain privileges, even though you may be very active in your profession or vocation and far away from retirement.  You are eligible for this benefit even if you complete 60 years on the last day of financial year ie March 31, You will be considered as ‘Super Senior Citizen’ when you complete 80 years in the financial year with still additional benefits. These benefits are not available to non-resident senior citizens.

In the recent Union Budget,2018, Finance Minister has offered a bouquet of benefits for the retired people who constitute nearly 9% of the total population. The tax benefits are two -pronged, impacting their tax savings and health protection.

Benefit of basic exemption limit

The basic exemption limits for non-senior citizens, senior citizens and super-senior citizens are as above: 

This difference in tax slabs translates into tax saving of Rs 2,500 for Senior Citizens and Rs 10,000 for Super-Senior Citizens. 

Deduction u/s 80D for payment of Medical Insurance Premium

A senior citizen is eligible to avail higher deduction for medi-claim insurance premium upto Rs 50,000 from AY 2019-20(FY 2018-19) as against Rs 30,000 available earlier.

Medical expenditure of very senior citizen u/s 80D

Most of the insurance companies do not provide insurance cover for medi-claims when you cross 80 years ie very senior citizen. In such situation you are entitled to claim deduction of all medical expenditure incurred on drugs, medicines, tonics, medical tests, doctor fees upto Rs 30,000 provided you are not covered under medi-claim insurance. 

No Advance Tax

Normally, a tax-payer is required to pay tax in advance in four installments before end of the year if your net taxable income after deducting TDS exceeds Rs 10,000. However senior citizens who are not having business income are exempt from payment of advance tax. In view of this, senior citizens with income from salaries, house property, capital gains, investments, need not worry about estimating their income for payment of advance tax. They can pay the entire tax liability by way of self-assessment tax at the time of filing of their tax returns on or before July 31. 

Non-deduction of TDS on 

interest

Tax at 10% is compulsory deducted at tax at source from interest payment made on deposits with banks and other financial institutions if annual interest due or paid exceeds Rs 10,000.This limit is raised for senior citizens  upto Rs 50,000 on bank saving deposits, fixed deposits, recurring deposits and post office schemes. There will not be any TDS on this amount. If senior citizens has more than Rs 50,000 interest and if his  income is below basic exemption limits of Rs 2,50,000 or Rs 5,00,000  in case of very senior citizens ,after   making contribution to specified avenues u/s 80C  such as  Public Provident Fund, National Saving Certificate, 5 years specified bank deposits, Life insurance Premium etc  upto Rs 1,50,000,  he can give declaration to the Bank in Form 15G/15H stating that his income is below taxable limits. It is advisable to give this declaration at the beginning of every financial year before interest is due, in which case no tax will be deducted from your interest income otherwise you have to wait to get TDS refund till tax return is filed. Under Pradhan Mantri Vaya Vandana Yojana , limit for investment is raised to Rs 15 lakh from existing limit of Rs 7.50 lakh. This Scheme offers assured interest of 8% for 10 years

Deduction for ailment of 

specified diseases u/s 80 DDB

 Medical expenditure incurred by persons suffering from certain specified diseases like neurological, dementia, Parkinson, cancer etc is eligible for deduction upto Rs 60,000 for senior citizen and upto Rs 80,000 for very senior citizens.This limit is raised to Rs 1 lakh from AY 2019-20 (FY2018-19).

No tax on amount received under Reverse Mortgage Scheme

Under Reverse Mortgage Scheme, a senior citizen by mortgaging the house or apartment owned by him can get loan either in lump-sum or in monthly installments, and at the same time he and his wife can live in the said house till their death. The amount so received is fully exempt from payment of income tax.

No routine tax scrutiny of senior citizens 

Senior citizens are not normally subject to scrutiny assessment by Tax Authorities as per directions from Central Board of Direct Taxes.

Exemptions from e-filing of tax return

The taxpayers are now required to file their tax returns electronically with tax authorities. However, very senior citizen who has income more than Rs 5,00,000 or having refund claim can file return either in paper mode or electronically as per his wish. 

The above benefits to senior citizens are in addition to the benefits available to non- senior citizens like deduction u/s 80C in respect of payment made towards Life Insurance Premium, Contribution to Provident Fund, Investment in National Saving Certificate, ULIP etc upto Rs 1,50,000; deduction in case of certain disabilities u/s 80U such as autism, cerebral palsy, mental retardation is eligible for deduction from income upto Rs 75,000 for partial disability and Rs 1,25,000 in respect of severe disability.

Tax benefits for Goan Citizens 

Senior citizens who are governed under the system of communion of properties under Portuguese Civil Code are eligible to divide their entire total income except salary and claim separately in the hands of spouse all the deductions available. This results in substantial tax benefits.
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