As per the Indian values and traditions, caring and respecting the elderly is of paramount importance in our society. At the same time, the Constitution of India and the Government of India promotes these virtues through various acts and laws and aim to encourage the citizens to follow this code of behavior passionately. Therefore, the constitution has given place to various acts that aims to provide social security, safeguard the rights and reduce the financial burden of this important section of our population.
As per the latest records, the number of greying Indians is continuously increasing, and this section of the population is expected to cover 20 percent of the total Indian population by the year 2050. This number is said to be greater than the total population of the United States. This means there is a high chance of an increase in the social, economic and health-care incidents and challenges related to the elderly. Hence, it is imperative for the government of the country to create opportunities as well as policies to empower the senior citizens and protect their future.
The elderly have contributed to the development of our nation and the growth of our economy in several ways for decades. Now, it’s time to return the favor, to care for those who have cared for their future generations. Therefore, every year the ruling government announces the budget as well as the tax benefits for senior citizens and regular citizens of their country. With these benefits, the government gives them the opportunity to live a dignified and quality life and spend their twilight years well.
What is the Income Tax Act?
Income tax is the tax or duty that every employed citizen with taxable income is liable to pay to the government directly. The tax to be paid depending on the income and the profit earned by the person. There are different rules for different income groups and rebates offered to the women and senior citizens under the Income Tax Act of India. Tax is not a new concept in independent India, it was levied in various forms by the rulers and invaders in the country. However, the major tax enactment in India under the Income Tax Act was passed by the parliament in 1961. Under this act, the tax is imposed on income from salaries, income from business or profession, income in the form of capital gains, income from house, property, and other sources. Any person, an individual, a company, a firm, an association of persons, local authority, body of individuals, and others are liable to pay tax under the Income Tax Act.
Who is a senior citizen under the Income Tax Act in India?
Constitution of India offers senior citizen tax rebate in many ways. This means any citizen of India who is 60 or above is the senior citizen eligible for senior citizen tax exemptions under this act. Previously, the age to avail tax benefits for senior citizens was 65 years. However, it was reduced in the Financial Year 2011-2012. It is worth noting that those who are above the age of 80 years are considered super senior citizens and have additional benefits. As per the current year, anyone who is born before 1960 a senior citizen.
Tax benefits on Slab Rates
Slab rates on taxable income are different for senior citizens and super seniors. They are granted a higher exemption limit when compared to those who are not 60 yet. Following are the slab rates and exemption limit for the year 2018-2019.
Senior citizens are exempted from paying the tax on income under Rs. 3,00,001. Meanwhile, seniors must pay 5% on income from Rs. 3,00,000 – Rs. 5,00,000, 20% on income from 5,00,000 – 10,00,000, and 30% on income more than Rs 10,00,000.
As for super seniors, they are exempted from paying the tax on income up to Rs. 5,00,000. They must pay 20% on income from Income from Rs 5,00,000 – 10,00,000, and 30% on income more than Income more than Rs 10,00,000.
Senior Citizen tax exemption under section 80TTB
There has been a significant increase in the limit of tax exemption under section 80TTB that allows senior citizens to claim a tax break on income earned from interest on bank savings, deposits, fixed deposits, recurring, and post office saving deposits in a financial year. As per the new rules, a deduction of Rs. 50,000 or an amount lower than that is allowed.
Senior Citizen tax rebate Under Section 80D
Section 80D for senior citizens under income tax aims to reduce the financial burden in events of critical health issues. This section provides for tax deduction from the total taxable income for the payment of medical insurance premium. For the current financial year, the limit is up to Rs. 30,000 and it has been increased to Rs. 50,000 which will be applicable from next year. This provides them a chance to live a healthy and quality life.
Tax exemption under Section 80DDB
This is an additional benefit for senior citizens with critical illnesses. Under this provision, there is an exemption limit on medical expenses of severe sickness up to Rs. 60, 000 for senior citizens and Rs. 80,000 for super seniors. This limit has also increased to Rs. 1,00,000.
More Tax benefits for Senior Citizens
Apart from this, senior citizens who do not have any income from business or profession are exempted from paying advance tax. Whereas, every citizen whose estimated tax liability surpasses Rs. 10,000 is obliged to pay advance tax.
In addition, senior citizens can also claim exemption from the payment of TDS on the interest earned through fixed deposit investment by filling the form 15H. This is only possible if your income is below taxable income.
Furthermore, the government 2007 introduced a source of earning monthly income with the help of a reverse mortgage scheme for senior citizens. This allows senior citizens to earn monthly income by mortgaging a self-owned house.
Finally, there has been an increase in investment limit under Pradhan Mantri Vaya Vandana Yojana. This insurance and pension plan will now allow the elderly to invest up to Rs. 15 lakhs, which is higher than the current limit.
Senior citizens are a precious section of our society that must be protected and taken care of. While the government is doing its bit, how are you helping this segment of our society? Let us know in the comments section below.