The Indian Income Tax Act gives certain tax benefits to Senior Citizens and also tries to ensure that income tax e-filing is a hassle free process.
Meaning of Senior Citizen for the purpose of Income Tax
For the purpose of Income Tax, there are 2 categories of Senior Citizens
- Senior Citizens: Those above 60 years of age
- Super Senior Citizens: Those above 80 years of age (inserted by Finance Act 2011)
Tax Benefits for Senior Citizens
1. Benefits of Slab Rates
The income tax slab rates for senior citizens are differential for senior citizens as compared to non-senior citizens. The slab rates are as follows
|Particulars||Non-Senior Citizen||Senior Citizen||Super-senior Citizen|
|Tax Free||Upto 2.5 Lakh||Upto 3 Lakh||Upto 5 Lakhs|
|10% Tax||2.5 Lakh to 5 Lakh||3 Lakh to 5 Lakh||NA|
As the slab rates are beneficial to Senior Citizens, this converts into a tax saving of Rs. 5000 for the Senior Citizens and Rs. 30,000 for the Super Senior Citizens. For complete income tax slabs refer: Income Tax Slab Rates
2. Deductions under Section 80D for payment of Medical Insurance Premium
The deduction allowed under section 80D for payment of medical insurance premium is Rs 15,000 for non-senior citizens. However, this deduction increases to Rs 20,000 for Senior Citizens
- Recommended Read: Tax Deduction for payment of Medical Insurance Premium
4. Non-deduction of TDS on Interest
In case the total income of a senior citizen is exempted from the levy of income tax and nil tax is payable by him for that financial year, he can submit Form 15H for non-deduction of TDS on Interest on Fixed Deposit
5. Higher Deduction under Section 80DDB for ailment of specified disease
Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Generally this deduction is available upto Rs 40,000. However, if the patient is a senior citizen, then deduction of Rs. 60,000 is allowable.
6. No Tax on amount received under Reverse Mortgage Scheme
Reverse Mortgage is the opposite of Home Loan. In a Home Loan, you pay EMI’s to the Bank and you own the house subsequently. Under the Reverse Mortgage Scheme, regular payment is made to Senior Citizens till lifetime by mortgaging his house while the ownership remains with the senior citizen and he also occupies the house.
As per the Reverse Mortgage Scheme, on the death of the borrower, the loan is repaid with accumulated interest through sale of the house property and the balance amount received on sale is given to the legal heirs.
The amount so paid as installments to the Senior Citizen is fully exempted from the levy of Income Tax.
- Recommended Read: Instalments under Reverse Mortgage to be completely Tax Free