In India majority of older persons face financial hardship in old age as most of them are not in a position to earn their livelihood. Their savings, if any, are not enough to meet their day to day, particularly the medical expenses. The Income Tax law provides various benefits to senior citizens in India with the view to mitigate their issues.
The basic tax exemption limit for normal citizens below 60 years of age is Rs 2.5 lakh in a financial year. But for Senior Citizens, the exemption limit is Rs 3 lakh, while for Very Senior Citizens, the limit is Rs 5 lakh.
So, a Senior Citizen doesn’t have to pay any tax or file ITR in case the annual income is up to Rs 3 lakh and no TDS is deducted during the financial year. Similarly, a Very Senior Citizen is exempted from paying tax and filing ITR if his/her annual income is up to Rs 5 lakh and no TDS is deducted.
Who is considered as a Senior Citizen in India?
According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years, as on the last day of the previous financial year.
Who is considered as a Super Senior Citizen in India?
A super senior citizen is an individual resident who is above 80 years, as on the last day of the previous financial year.
Deduction under Section 80TTB
Senior citizens receiving interest income from FDs, savings account and recurring deposits can avail income tax exemption of up to Rs 50,000 annually under Section 80TTB. This is by way of an amendment vide Finance Act 2018.
Specified income is any of the following income in aggregate:
- Interest on bank deposits (savings or fixed);
- Interest on deposits held in a co-operative society engaged in the business of banking, including a co-operative land mortgage bank or a co-operative land development bank; or
- Interest on post office deposits
Deduction under Section 80D
Every individual or HUF can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. Not only can an individual take benefit by purchasing a health plan for themselves but also one can take advantage of buying the policy to cover their spouse, dependent children or parent.
What is the quantum of deduction under Section 80D?
An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if parents are aged above 60. Let us refer to the table given below to understand this better:-
Is any deduction available w.r.t preventive health check up?
Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs 5,000, which is within the overall limit of Rs 25,000/Rs 50,000 as the case may be.
In conclusion, if you are a senior citizen you will get additional deduction of 25,000 than a normal individual under Section 80D.
Deduction under Section 80DDB
Deduction under section 80DDB is allowed for medical expenses incurred for medical treatment of specified diseases or ailments. The nature of diseases and ailments which are included for deduction under Section 80DDB are mentioned in Rule 11DD of Income Tax which are as follows:
- Neurological Diseases as identified by a specialist ,where the level of disability has been certified to be of 40% and above and covers Dementia, Dystonia Musculorum Deformans, Chorea, Motor Neuron Disease, Ataxia, Aphasia, Parkinson’s Disease and Hemiballismus.
- Malignant Cancer
- AIDS- Acquired Immuno-Deficiency Syndrome
- Chronic Renal failure
- Hematological disorders like Hemophilia or Thalassaemia.
Basically, an individual up to 60 years of age may claim deduction up to Rs 40,000 in a financial year u/s 80DDB on expenditures made on medical treatment of specified diseases or ailments of self or dependent relatives of below 60 years of age, while the limit is Rs 1 lakh for Senior Citizens and Very Senior Citizens.
No Advance Tax
While ordinary individuals have to pay an advance tax if their tax liability is Rs.10,000 or more in a financial year, senior citizens are free from this burden unless they make income under the head ‘Profits and Gains from Business or Profession’. Those not owning a business only have to pay the Self-Assessment Tax.