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. The complete list of all the tax benefits available to senior citizens is compiled in this article.
Who is a Senior Citizen for Income Tax purpose?
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
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|
|5% 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. Interest Income exempted upto Rs. 50,000
With effect from Financial Year 2018-19, new Section 80TTB has been introduced which allows for deduction for interest of Rs. 50,000. The amount earned over Rs. 50,000 would be taxable as per the Slab Rates of the Senior Citizens.
For eg: If a senior citizen earns interest income of Rs. 75,000, out of this – Rs. 50,000 would be allowed as a deduction under Section 80TTB and the balance Rs. 25,000 would be taxable as per the slab rates.
However, it is important to note that no deduction under Section 80TTA of Rs. 10,000 for Interest on savings account would be allowed in such cases.
3. Deductions under Section 80D for payment of Medical Insurance Premium
The deduction allowed under section 80D for payment of medical insurance premium is Rs 25,000 for non-senior citizens. However, this deduction increases to Rs 50,000 for Senior Citizens (increased from Rs. 30,000 to Rs. 50,000 in Budget 2018 and applicable from 1st April 2018)
Moreover, in case of very super-senior citizens i.e. people above the age of 80, deduction under Section 80D is allowed not only for payment for Medical Insurance Premium but also for the actual expense incurred on treatment by very super senior citizens.
- Recommended Read: Tax Deduction for payment of Medical Insurance Premium
4. Exempted from payment of Advance Tax
Senior Citizens not having business income are exempted from payment of any Advance Tax and are only required to pay Self Assessment Tax on their total income (Inserted by Finance Act 2012)
5. 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.
In case of Senior Citizens, this form can be submitted if the Total Income after Deductions is less than the minimum amount exempted from the levy of tax whereas in case of non-senior citizens this form is applicable if the Total Income before deductions is less than the minimum amount exempted from levy of tax.
Thus, in case of Senior Citizens the benefit is higher and therefore Form 15H is to be filed in case of Senior Citizens whereas Form 15G is to be filed in case of non-senior citizens.
The threshold for deduction of taxes under Section 194A in case of senior citizens has also been raised from Rs 10,000 to Rs. 50,000. This amendment was introduced in Budget 2018 and is applicable from FY 2018-19 onwards.
6. 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. The deduction allowed under this section earlier was Rs. 60,000 for Senior and Rs. 80,000 for Super-Senior Citizens.
This has now been increased to Rs. 1,00,000 for both Senior and Super Senior Citizens with effect from FY 2018-19. [Amendment introduced vide Budget 2018]
7. 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
Other Relevant Points
- From Financial Year 2018-19 onwards, Senior Citizens getting Pension Income can also claim Standard Deduction of Rs. 40,000 from their Pension Income.