Senior citizens are provided with certain income tax benefits to help them earn up to ₹3-5 lakh per annum on exemptions. In this article, let's look at some of the advantages that senior citizens can get from the income tax slab for FY 2020 21 through ITR.
Even though we might not enjoy it, we have to save money for the future because no one knows what lies ahead. One day we are satisfied with the amount we earn and spend extravagantly, and the next day it’s gone. The smart thing to do here would be to save up some money for a rainy day. It will also help us when we have retired and serve us with several benefits. Your Guide to Understanding Income Tax Benefits for Senior Citizens in India
We sometimes overlook the fact that we play a major role in the country’s overall growth and individual development, and paying income tax is how we do it. The percentage of our earnings that go directly to the government is called income tax. The government, in turn, has created the website of ITR, which helps us keep track of all the updates in income tax, like the income tax slab for FY 2020 21.
Who Can Be Considered Senior Citizens, and Why do They Get Income Tax Benefits?
Residents over the age of 60 are considered senior citizens in India, and those above 75 are super senior citizens. The government of India grants certain benefits in terms of income tax to senior and super senior citizens. These income tax benefits are of great help since older citizens do not have a steady source of income owing to their age and ill-health.
Income Tax Benefits for Senior Citizens in India
Certain tax benefits are available to senior citizens in India. These benefits include a higher exemption limit on income taxes, a higher deductible limit on health insurance premiums, and a higher TDS limit on deposits. Following is the list of some of those benefits:
Filing ITR
The Income Tax Act of 1961 did not allow senior citizens any exemption to filing ITR until recently. Section 194P of the Finance Act of 2021 has made it easier for those above 75 years of age by granting them IT exemptions. Therefore, contrary to the earlier days, the super senior citizens of India have a great advantage today.
Filing ITR in the Offline Mode
Another benefit for senior citizens is that they can file ITR offline. Many senior citizens find it challenging to file their returns online. With effect from the Assessment year of 2019-20, a senior citizen can file form16 ITR 1/ ITR 4 on paper, meaning that they are not required to ITR 2a instructions Of course, if they want to file their returns electronically, they always have the option to do so.
Advance Tax Payment
The advance tax requires every citizen whose tax liability is valued at ₹10,000 or more for the year to pay his tax in advance, which is why the name. This rule was as per section 208 of the Income Tax Act. The revised Section 207 removes senior citizens from this liability, and without any source of income from a business or a job, they don’t have to pay advance tax.
A Reduced Amount of Deposits
Under Section 80TTB of the Income Tax Act, the senior citizens can avail of tax benefits when they earn interest of up to ₹50,000 on deposits with banks, post offices, or cooperative banks. Under this provision, interest earned on both saving deposits and fixed deposits can be considered.
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Premium Medical Insurances
Senior citizens frequent hospitals for regular check-ups or treatments because of deteriorating health. It doesn’t come as a surprise that many citizens opt for medical insurance to cover hospital expenses. However, selecting the right insurance plan is important, and certain things are to be kept in mind, like their deductibility or co-payment policy. Under Section 80D of the Income Tax Act, premium pay towards a health insurance policy, especially for critical illnesses, can be considered a major income tax benefit for senior citizens.
The Latest Tax Slab for Senior and Super Senior Citizens in India
According to the new income tax slab for FY 2020 21, the Central Board of Direct Taxes (CBDT) clarified that an Indian citizen’s age on or before April 1 would be taken into account for calculating the higher exemption limit of inheritance tax
Is there any Standard Deduction for Senior Citizens?
As per the recent update in the Income Tax Act, ₹50,000 is the standard deduction for senior citizens.
Income Tax Benefits for Senior Citizens and Super Senior Citizens
Income tax slabs in India are structured in a progressive manner, with tax rates increasing as income levels rise. Certain tax benefits and concessions are available to senior citizens aged 60 and up but under the age of 80, as well as super senior citizens aged 80 and up. Let us go over the tax provisions that apply to resident senior citizens and super senior citizens in detail.
Income Tax Slab For Senior Citizens
Senior citizens over the age of 60 have the option of paying taxes under the old or new tax regime. Non-resident senior citizens, on the other hand, are not eligible for the tax slabs listed below because they are subject to the standard income tax provisions.
According to the old tax regime, the income tax slab rates for senior citizens for the fiscal year 2022-23 are as follows:
| Income Range | Income Tax Rate |
| Up to INR 3,00,000 | N/A |
| 3,00,001 to 5,00,000 | 5% of income over INR 3,00,000 |
| 5,00,001 to 10,00,000 | INR 10,000 + 20% of income over INR 5,00,000 |
| Above 10,00,000 | INR 1,10,000 + 30% of income over INR 10,00,000 |
Income Tax Slab For Super Senior Citizens
Super senior citizens over the age of 80 can also benefit from both the old and new tax regimes, as they can choose which is more advantageous.
According to the old tax regime, the income tax slab rates for super senior citizens for fiscal year 2022-23 are as follows:
| Income Range | Income Tax Rate |
| Up to INR 5,00,000 | N/A |
| Between 5,00,001 to 10,00,000 | 20% of income over INR 5,00,000 |
| Over 10,00,000 | INR 1,00,000 + 30% of income over INR 10,00,000 |
Benefits Available To The Senior And Super Senior Citizens
Benefits for Senior and Super Senior Citizens in Income Tax
For seniors and super seniors, there are many tax benefits provided by the Income Tax Act, 1961. Here are the benefits you need to know about:
- Higher Income Exemption Limit
– For senior citizens, the income limit without paying tax is INR 3,00,000.
– Super senior citizens have a higher limit of INR 5,00,000.
– This is higher than the limit for regular individuals, which is INR 2,50,000.
- Standard Deduction
– If seniors earn salary or pension income, they can get a deduction of INR 50,000 from it.
- Tax Rebate under Section 87A
– Senior citizens don’t need to pay any tax if their income is up to INR 5,00,000.
- Higher Deduction for Medical Insurance Premium
– Seniors can claim a deduction of up to INR 50,000 for medical insurance premium under Section 80D. This is double the amount available to others.
– The payment must be made through online banking channels.
- Higher Deduction for Medical Treatment
– Seniors can claim a deduction of INR 1,00,000 for medical expenses related to specified diseases under Section 80DDB.
- Higher Deduction for Bank and Post Office Interest
– Senior citizens can claim a deduction of up to INR 50,000 for interest earned from savings bank accounts, bank deposits, post office deposits, or cooperative banks under Section 80TTB.
– This is much higher than the INR 10,000 limit for those under 60.
- Exemption from Advance Tax Payment
– Seniors don’t need to pay advance tax if they don’t have income from business or profession.
- When Seniors Don’t Need to File Tax Return
– Seniors aged 75 years or more, with only pension and interest income, don’t have to file a tax return if they’ve submitted a declaration to the bank.
- Reverse Mortgage Scheme
– Seniors who transfer their house under a reverse mortgage scheme don’t pay capital gains tax on the house transfer.
- Deduction on Senior Citizens Savings Scheme Investment
– Seniors over 60 can invest in the Senior Citizens Savings Scheme and claim a deduction of up to INR 1,50,000 under Section 80C.
For expert guidance on these benefits and to make sure you’re availing all the tax advantages available to you, Vakilsearch’s legal services can help. Our experts can guide you through the process and ensure you’re making the most of these benefits.
FAQs
How much can senior citizens earn tax-free in India?
Senior citizens can earn up to INR 3,00,000 without paying tax.
What's the income tax limit for senior citizens?
Senior citizens with income up to INR 3,00,000 don't need to pay tax.
Can I claim both 80TTA and 80TTB?
No, you can only claim either 80TTA or 80TTB, not both.
How much FD interest is tax-free for senior citizens?
Senior citizens can claim up to INR 50,000 as a deduction for interest from bank deposits.
How can seniors avoid tax in India?
Seniors can use deductions and exemptions provided by the tax laws to reduce their taxable income.
How is tax calculated for senior citizens?
Tax for senior citizens is calculated based on the income slab they fall under.
What are the schemes for saving tax for senior citizens?
Senior Citizens Savings Scheme (SCSS) and deductions under Sections 80C, 80D, and 80TTB are some options.
What's the tax slab for non-resident (NRI) senior citizens?
NRIs have different tax slabs, and do not get the benefits mentioned earlier.
Conclusion
Income tax is one of those topics that we cannot avoid, being responsible citizens of the country, no matter how complicated it can get Income Tax Benefits. However, understanding the particulars of filing income tax returns, especially for senior and super-senior citizens, has never been easier than it is today. It is thus crucial that every citizen is aware of the exemptions and benefits that they can avail of, once they reach retirement age.
