Senior Citizens are people aged 60 years or above and Super Senior Citizens are aged 80 or above. Hence they are entitled to various tax benefits and concessions owing to several high-cost medical treatments and financial security.
So, let’s have a look at the various deductions and benefits offered to them under the Income Tax Act.
- Higher Basic Exemption limit: Senior citizens are eligible for a higher tax exemption limit of ₹3 lakhs and super senior citizen has a benefit of an enhanced tax exemption of ₹5 lakhs against ₹2.5 lakhs for general taxpayers.
- Standard Deduction: If you’re a retired employee and getting a pension from your employer, you may claim a deduction of up to ₹50,000 against such salary income.
- Exemption on Advance tax: If there is no income from business & profession, a senior citizen is exempt from paying advance tax.
- Exemption on Reverse mortgage: Under the reverse mortgage concept a senior citizen can earn monthly income (EMI) by mortgaging a property they own. This income is tax-free along with retaining the ownership of the property.
- No deduction of TDS on Interest: If the total income of a senior citizen is exempted and nil tax is payable for that FY, then they can submit Form 15H for non-deduction of TDS on Interest on Fixed Deposit.
- E-filing is not mandatory: For super senior citizens, e-filing is not compulsory. They can file their return offline as well.
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Deduction on Interest income: Under section 80TTB a senior citizen can claim a deduction of up to ₹50,000 on the interest income earned from:
- Bank Deposits: Saving account, Fixed Deposits & Recurring deposits
- Deposits from Cooperative Societies,
- Post Office
- Under the new tax regime, senior & super-senior citizens are not eligible for a deduction.
- Bank statements and interest certificates are required for tax computation.
- Deduction on Health Insurance: Senior citizens and super senior citizens can claim up to ₹50,000 u/s 80D for the amount paid towards medical insurance premiums, medical expenditures, and preventive health checkups. This also includes the limit of ₹5000 on health checkups.
When is it that a senior citizen is not required to file an ITR?
From AY 2022–23, senior citizens aged 75 or above, shall not be required to file their ITRs. This provision is available to those individuals who receive pension income and interest income from the account(s) maintained with the bank from which they receive such income. The specified bank is responsible for calculating the total income and taxes after considering chapter VI-A deductions and rebate u/s 87A.
Read more about Tax benefits for Senior Citizen and Super Senior Citizen: