Income Tax benefits for senior citizens. Higher exemptions, relief and rebates

Income Tax benefits for senior citizens, higher exemptions, relief and rebates 

Income Tax benefits for senior citizens, higher exemptions, relief and rebates. Income-tax Act provides several benefits and exemptions to the senior citizens. However,  to become eligible to these benefits the senior citizen/very senior citizen must be resident in India. These benefits are not available to a non-resident even though he may be of higher age.  These benefits are in addition to the other benefits/deductions/exemptions otherwise available to them as a normal taxpayers.  

What are income Tax benefits for Senior Citizens or Super Senior Citizens?

Who is called a Senior Citizen?

Answer: As per Income Tax Act, a senior citizen has been defined as an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

Who is called a Super Senior Citizen ?

Answer: As per Income Tax Act, a senior citizen means an individual resident in India who is of the age of Eighty years or more at any time during the relevant previous year.

Example: The following table illustrates the senior citizen status of a person (Say Mr. A)

Thus the cut-off date of birth for qualifying as senior citizen for various assessment years is as under:

and so on.

Income Tax benefits to senior citizens. Higher exemptions limits, relief, rebates & deductions under Income Tax Act. relief in TDS, advance tax

The various benefits, reliefs and exemptions available to senior citizens / super senior citizens under Income Tax Act, 1961 are as under:

1. Higher Basic Tax Exemption Limits under Old Tax Regime:

Senior citizen or super senior citizen is entitled to higher tax exemption limits against normal citizen. For AY 2021-22 and AY 2022-23 the basic income tax exemption limit for the both is as under:
Senior Citizen                       Rs. 300000/-
Super Senior Citizen             Rs. 500000/-

However, under New Tax Regime, no separate tax exemption slabs have been prescribed for senior citizens.

2. Exemption from linking of PAN with Aadhaar 

CBDT vide Notification No. 37/2017 11.05.2017 of  has exempted a super senior citizen from provisions of section 139AA which requires linking of PAN with Aadhaar Number.

3. Exemption from filing return of income 

From 01/04/2021, under section 194P senior citizens who are of the age of 75 year or above are exempted from filing the return of income subject to following condition.

(i) He/she is not having income other than pension or interest received from the bank in which he/she is receiving pension income; and

(ii) has furnished a declaration of income and available deductions/rebates to the bank in this respect and bank will deduct the income tax on the total income of the senior citizen.

4. Filing Manual / Paper return of income

A super senior citizen is entitled to choose filing paper or manual return in Form Sahaj (ITR-1) or Form SUGAM (ITR-4) instead of e-filing of return. 

5. Higher deductions under Chapter VIA

A senior citizen or super senior citizen is entitled to higher deductions under the following sections of Chapter VIA of Income Tax Act.

(a) Deduction in respect of Senior Citizen Saving Scheme [ Section 80C ]

Under section 80C a deduction up to Rs. 150000/- (One lakh fifty thousand) is allowed for amount paid or deposited in specified modes. wef 01-04-2008, an amount deposited in an account under the Senior Citizens Saving Schemes Rules, 2004 is allowed as qualified under section 80C. 

(b) Deduction in respect of Medical treatment etc. [ Section 80DDB ]

Section 80DDB provides for a deduction of Rs. 40000/- ( Forty thousand) to a resident assessee for medical treatment of disease specified in Rule 11DD.

However if the amount is paid for the medical treatment of a senior citizen, then a higher deduction of Rs. 1,00,000/- (One lakh) is allowed. 

The diseases specified under Rule 11DD are as under:
(i) Neurological Diseases as under where the disability level has been certified to be of 40% and above,
         (a) Dementia
         (b) Dystonia Musculorum Deformans 
         (c) Motor Neuron Disease 
         (d) Ataxia
         (e) Chorea
         (f)  Hemiballismus
         (g) Aphasia
         (h) Parkinsons Disease 
(ii)       Malignant cancer
(iii)      Full Blown Acquired Immuno-Deficiency Syndrome
(iv)      Chronic Renal Failure
(v)       Haematological Disorders
          –     Hemophilia
          –     Thalassaemia

(c) Higher deductions in respect of health insurance premia [ Section 80D ]

Section 80D provides for a deduction up to Rs. 25000/- (Twenty Five Thousand) for medical insurance or preventive health check-up. Under the section, in  case of payment made for medical expenditure of a senior citizen, deduction is available up to Rs. 50000/- (Twenty Thousand).

(d) Deduction in respect of interest on deposits

Under section 80TTB a deduction of Rs. 50000/- is available to senior citizens with respect to interest on deposits (both time deposits and savings bank) maintained with bank/post office etc.

6. Relaxation from deduction of Tax on interest

Under section 194A, from AY 2019-20, the interest payable by banks/post office/Cooperative societies to senior citizens is not liable to TDS on payment of interest up to Rs. 50000/- per annum.

7. Exemption to pay Advance Tax under Section 207

As per section 208, where the income tax payable by an assessee for any financial year (after deducting tax deducted at source) is Rs. 10000/- or more, the tax shall be payable in advance during the financial year itself. However senior citizens have been exempted for payment of advance tax if they are not engaged in business or profession.

8. No Deduction of Tax at Source (TDS) by submission of Form 15H in certain cases.

A resident senior citizen can receive certain incomes (interest,furnish a declaration under sub-section (1C) of section 197A to his Assessing Officer in Form 15-H stating that tax on his estimated total income of the previous year in which such incomes is to be included in computing his total income will be nil. Senior citizens can give this declaration even if such incomes exceed the maximum amount which is not chargeable to tax.(i.e., Rs. 300000/- and Rs. 500000/- for senior citizens and super senior citizens respectively) Read More +Download Form 15H >>

9. Reverse Mortgage Scheme – Section 47

The Finance Minister in his Union Budget 2007-08 had announced that the National Housing Bank (NHB) will introduce reverse Mortgage Scheme for senior Citizens. As of now, almost all the banks have come up with this scheme. Reverse mortgage is a scheme under which a senior citizen of the age of 60 years or more who is the owner of a house can avail of a monthly stream of income against the mortgage of his/her house, while remaining the owner and occupying the house throughout his/her lifetime, without repayment or servicing of the loan.

On the borrower’s death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property.  Section 47 of the Income Tax Act, 1961 has been amended to provide that mortgage of house property for obtaining a loan under reverse mortgage shall not be considered a transfer of house property and accordingly shall not attract capital gain tax.

Further section 10 of the Income Tax Act, 1961 has also been amended to provide that any amount received as a loan under reverse mortgage scheme shall not be included in the income. Read More on Reverse Mortgage Scheme>>

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