Income Tax Benefits for Senior Citizens: Many concessions have been given under the Senior Citizens Income Tax Act.
Income Tax Benefits for Senior Citizens: Taxpayers get tax benefits under the old slab of income tax. However, special relief is given to the elderly. People above 60 years of age not only get the benefit of tax exemption but they also get special relief on investment and returns. According to the old slab, senior citizens have been kept out of the tax net on annual income up to Rs 3 lakh, while those below this age get tax exemption only on income up to Rs 2.5 lakh. However, this limit is higher in case of super senior citizens. Income up to Rs 5 lakh of elderly people above the age of 80 years has been kept out of the purview of income tax. Apart from this, many types of concessions are given to the elderly under the Income Tax Act.
According to the tax slabs for the financial year 2020-21, there is no tax on senior citizens income up to Rs 3 lakh, tax at the rate of 5 per cent on income of 3-5 lakh and cess at the rate of 4 per cent, 5-10 lakh Income up to Rs. 20 per cent attracts tax at the rate of 20 per cent and cess at the rate of 4 per cent and income above Rs 10 lakh attracts tax at the rate of 30 per cent and cess at the rate of 4 per cent.
Relief from returns
Some senior citizens have been given special concessions under the Finance Act 2021. Under this, citizens fulfilling a certain criteria are not required to file income tax returns. Under Section 194P of the Income Tax Act, elderly people above the age of 75 years who have income only from pension and interest, can get exemption from filing a return by submitting a form to their bank. In such a situation, the bank will calculate the tax on their income and deposit it in the government treasury.
E-filing not required
Senior citizens above 80 years i.e. super senior citizens can also file ITR-1 and ITR-4 forms offline. Such taxpayers have been given the option to file their returns online or through paper mode.
50 thousand relief on health insurance
Taxpayers above 60 years of age get relief of up to Rs 50,000 annually under section 80D of the Income Tax Act for health insurance premium or medical expenses. Apart from this, if senior citizens pay health insurance premium for senior citizen parents, they can claim an additional deduction of Rs 50,000 under section 80D. Apart from this, they can claim deduction of up to Rs 1 lakh on treatment of critical illnesses under section 80DDB.
Relief from paying advance tax
Generally, taxpayers whose annual tax liability exceeds Rs 10,000 are liable to pay advance tax under section 211. However, senior citizens who have income only from salary, pension, rent and interest have been given relief from paying advance tax.
Rebate of up to Rs 50,000 on interest, relief from TDS
Senior citizens get the benefit of deduction of up to Rs 50,000 on the interest earned from the capital deposited in the bank or post office. Apart from this, banks will not deduct TDS (Tax Deducted at Source) if the annual income on deposits in banks is less than Rs 50,000. The special thing is that this limit of 50 thousand rupees is per bank.
Standard deduction of Rs 50,000
Pension of the elderly also comes under the purview of income tax and standard deduction of Rs 50,000 can be claimed annually on pension under the Income Tax Act. This concession is given to the elderly in the form of treatment and travel expenses, for which no documents are required for claim.
