ITR

Your Guide to Understanding Income Tax Benefits for Senior Citizens in India

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.

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.

UNDERSTAND THE INCOME TAX BENEFITS

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: 

Use Vakilsearch`s Income tax calculator to decide your taxable earnings and document your Individual Tax Return (ITR) with ease.

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 Form ITR 1/ ITR 4 on paper, meaning that they are not required to file ITR 1/ ITR 4 electronically. 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, a senior citizen can avail tax benefits when they earn interest of up to ₹50,000 on deposits with banks, post offices, or co-operative banks. Under this provision, interest earned on both saving deposits and fixed deposits can be considered.

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 tax liability.

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.

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. 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.

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