Senior Citizen Tax Savings
March 19, 2021
Seniors and super-seniors have a lot to cheer about. The Government has announced a slew of measures to ease the tax burden, thus directly impacting the savings capacity of senior citizens. And rightly so, since senior citizens have had to bear the brunt of taxes during their working years. These measures are a much awaited initiative by the Government. So what are these benefits? This article will help answer all of these questions.
Before we talk about the Government schemes for Senior Citizens in India, 2020, let’s see how the Income Tax department defines ‘Senior Citizens’.
- Any individual between the age of 60 – 80 will be classified as a senior citizen
- Individuals at the age of 80 and above will be classified as super senior citizens
This article will look at five tax saving benefits for senior and super senior citizens.
# 1 Privilege on Interest Income
Most individuals receive tax relief for only Rs <10,000> on their Savings Account (under section 80 TTA). Senior citizens and Super Senior citizens on the other hand, get tax benefits up to Rs 50,000 on the interest earned on their savings bank account, deposits in a bank, and/or deposits in post-office.
# 2 Zero Advance Tax
Most individuals have to pay advance tax, if the total tax payable for the entire year exceeds Rs 10,000. Taxpayers are required to pay advance tax throughout the year in instalments. If this tax is not paid on time, taxpayers are liable to pay additional interest on the unpaid taxes while filing returns. Seniors and Super Seniors on the other hand do not have to pay any advance tax. They can file their entire tax at the time of filing their returns, and they needn’t pay the interest on their tax or even pay any late payment penalties.
This proves to be a huge relief for Seniors and Super Seniors when it comes to saving the trouble of paying advance taxes.
# 3 Filing Returns
As most individuals may already be aware, income tax is mandated to be filed online. You may be surprised to know that when it comes to Senior Citizens and Super Senior Citizens – there is an option to file taxes physically at the Income Tax department. Again, if they choose they can file taxes online, but the offline method is just for their convenience. The Income Tax department has also provided a special department where Seniors and Super Seniors can take the help of tax officials and get their queries answered.
# 4 Health Insurance Premium
Under section 80D of the Income Tax Act, most individuals get tax relief of Rs 25,000 on premiums paid towards Health Insurance. Seniors and super seniors, on the other hand, get tax relief of up to Rs 50,000 on premiums paid towards health insurance. This means that Seniors and Super Seniors are allowed to claim a deduction of up to Rs 50,000, per budgetary year, for medical insurance premium instalments. However, keep in mind that this cannot be utilised for their own medical expenses.
# 5 Section 80DDB of Income Tax Act
Finally, under section 80DDB of the Income Tax Act, most individuals get tax relief of up to Rs 40,000 or the actual amount paid for medical treatment, whichever is lower. The Income Tax Department has a specific list of diseases that can be covered under the Act. So, an individual or family member/s suffering from any of the specified diseases can get tax relief, if the amount does not exceed Rs 40,000. The income tax rebate For Seniors and Super Seniors, on the other hand, is fixed at Rs 1,00,000. This means that if a Senior or Super Senior desires to spend on themselves or a family member for treatment of specified diseases under 80DDB, they are entitled to a yearly deduction of Rs 1,00,000.
The Government has laid down a number of benefits for senior citizens in India. These benefits are essential to assist seniors in their old age and provide tax relief for everyday financial expenses. In order to avail these benefits, Seniors and Super Seniors must keep themselves abreast with all the tax benefits and the senior citizen monetary benefits that they are entitled to from the Government.
The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.