A senior citizen in India is anyone who is above the age of 60. After years of hard work and dedication, these people have earned a few privileges and benefits that are often termed as senior citizen benefits or concessions. Ranging from social security schemes to pension plans, there are many types of concessions offered to the older adults by the Government of India and the Constitution of India. And why not? After all, these people have put in decades of labor and drudgery for the development of not only their families, but also the nation and its economy.
Indian traditions and society have lived by the virtue of respecting the elderly. Caring for older adults is thought to be a rudimentary duty of the citizens. Therefore, the government has made several provisions under the Income Tax Act to reduce the financial burden of senior citizens. There is a range of tax savings options for senior citizens under the Act that was enacted in 1961. These provisions not only reduce the financial burden, but also provide means to live a quality life in their twilight years.
It is worth noting that this section comprises the large portion of the Indian population. The reports suggest that the numbers are expected to grow further, and older adults will cover 20 percent of the total population of India by the year 2050. This means that the number of senior citizens in our country will be greater than the total population of the United States. This rapid increase in number can trigger the incidents of socio-economic and health-care issues that the government and the senior citizens must be able to handle when time comes. Therefore, through these tax benefits for senior citizens and other provisions the government aims to contribute to the development of this important section of the society. Let’s learn more about the IT exemption for senior citizens as granted under the Income Tax Act.
Tax Saving Options for Senior Citizens
If you are wondering whether you are eligible or not for these tax benefits for senior citizens, then here is your answer. Anyone, who is above the age of 60 years is eligible for rebates under the Income Tax Act 1961. Previously, the age to avail various senior citizens benefits was 65 years. This was changed to 60 years in the Financial Year 2011-2012.
Tax benefits on slab rates
The slab rates and exemption on it are based on various classifications such as income groups, gender, and age groups. For the senior citizen, the slab rate is different for those who are above 60 and for those who are above 80 years of age, also called super seniors.
For senior citizens, no tax is payable if their income is under Rs. 3,00,000. Anyone who earns between Rs. 3,00,000 – Rs. 5,00,000 must pay 5% tax on their income. For seniors, who earn more than 5,00,000 – 10,00,000, must pay 20% tax on their income and for seniors earning more than 10,00,000 they must pay 30% tax on their income.
On the other hand, super seniors have greater exemptions on their taxable income when compared to seniors. Super seniors are exempted from paying the tax on income up to Rs. 5,00,000. They must pay 20% on income between Rs. 5,00,000 – 10,00,000, and 30% on income more than Rs. 10,00,000.
Tax Saving Options for Senior Citizens Under section 80TTB, 80D and 80DDB
Apart from tax savings on gross income, various sections under the act allow more elderly tax deductions. Under section 80TTB, senior citizens are allowed to claim a tax break on income earned from interest on their savings, deposits, fixed deposits, recurring and post office deposits in a financial year. With proof, this section enables them a deduction of Rs. 50,000 or an amount lower than that.
In situations of critical illness and health issues, the government aims to reduce the financial burden. Under Section 80D, the government allows elderly tax deduction from the total taxable income for the payment of medical insurance premium. Health insurance is good for everyone, it provides financial support in the time of emergency. For the current financial, the limit is up to Rs. 30,000. This limit shall increase to Rs. 50,000 from the next financial years. This provision gives the elderly the power to chose quality life and choose good treatment.
Senior citizens get extra benefit under 80DDB. It permits an exemption on the medical bill in the case of severe sickness. For seniors, the limit is restricted to Rs. 60,000 and for super seniors the limit is Rs. 80,000. This limit has been further enhanced to Rs. 1,00,000.
Property Tax Reduction for Seniors
In India, income earned from property usually a building, flat, shop and more is considered one of the main sources of income. However, the amount of tax on the property is calculated on the basis of the value of the property. The tax is levied by the local municipal authority in order to maintain basic civic services in the society. You may get an exemption on the basis of your age.
More Tax Benefits for Senior Citizens
Apart from the above-mentioned tax benefits, senior citizens who do not have any income from business or profession are exempted from paying advance tax. Moreover, the form 15H can help senior citizen claim exemption from the payment of TDS on the interest earned through fixed deposits. However, the income must be below taxable income.
The government also allows elderly a monthly source of income with the help of a reverse mortgage scheme. It enables older adults to earn a regular income by mortgaging a self-owned house.
These are few tax benefits for senior citizens of India. There are many other benefits offered to this precious section of our population such as concessions on travel tickets, special health care facilities and saving schemes. It is a good idea to make use of these provisions for a brighter and happier future.