In this article, we have covered 6 income tax benefit that is allowed to any senior citizen or a very senior citizen.
🙂 Let’s get into it
1. An exemption in the quantum of non-taxable income
|Senior Citizen||Very Senior Citizen|
|For FY 2017-18, the quantum of non-taxable income of a resident senior citizen is Rs.3 lakh. The exemption limit for a normal citizen is Rs.2.5 lakh. The difference of 50 thousand (3-2.5 lakh) is the exemption in the quantum of non-taxable income for a resident senior citizen.||For FY 2017-18, the quantum of non-taxable income of a resident very senior citizen is Rs.5 lakh. The exemption limit for a normal citizen is Rs.2.5 lakh. The difference of 2.5 lakh (5-2.5 lakh) is the exemption in the quantum of non-taxable income for a resident very senior citizen.|
💡 For Reference: Income Tax Slab for senior citizen [ AY 2018-2019 ]
|Income Slabs||Tax Rates|
|i.||Where the taxable income does not exceed Rs. 3,00,000/-||NIL|
|ii.||Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/-||5% of the amount by which the taxable income exceeds Rs. 3,00,000/-|
|iii.||Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-||Rs. 10,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.|
|iv.||Where the taxable income exceeds Rs. 10,00,000/-||Rs. 1,10,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.|
💡 For Reference: Income Tax Slab for super senior citizen [ AY 2018-2019 ]
|Income Slabs||Tax Rates|
|i.||Where the taxable income does not exceed Rs. 5,00,000/-.||NIL|
|ii.||Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-||20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.|
|iii.||Where the taxable income exceeds Rs. 10,00,000/-||Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.|
2. Non-deduction of TDS even though income exceed Rs.3/5 Lakh
If a declaration is submitted in form 15G/H (u/s 197A) by the recipient to the payer along with his PAN, then no tax is deducted under section 192A, 193, 194A, 194, 194DA, 194EE.
For a normal taxpayer, this declaration cannot be used if the total income exceeds the quantum of non-taxable income (2.5 lakh).
However, a senior citizen or super senior citizen can avail the benefit of 15H even if the income exceeds the quantum of non-taxable income of 3 lakh and 5 lakh respectively. Download Form 15H
3. No need to pay advance tax
A normal taxpayer is required to pay advance tax where expected tax liability for a year exceeds Rs. 10000/- or more.
However, a senior citizen not having any income from PGBP is not liable to pay advance tax even if the expected tax liability for the year exceeds Rs. 10000/-.
An assessee who has opted for the scheme of computing business income on a presumptive basis (u/s 44AD) is also not required to pay advance tax.
4. Exemption from e-filling of IT return
A very senior citizen can file his IT return in Form ITR 1 or4 in paper mode, i.e., for him, e filing of ITR 1 and 4 (as the case may be) is not mandatory. However, he may go for e-filing if he wishes. This exemption is not available to senior citizen.
From the AY 2017-18 onwards any taxpayer filing return of income in Form ITR 1 or 4 and having a refund claim in the return or having the total income of more than Rs.5 Lakh is required to e-file IT return.
However, Income-tax Law grants relaxation from e-filing in above case to very senior citizen.
5. Deduction under chapter VIA
Deduction of Rs. 30000/- for senior citizen (Rs. 25000/- for assessee other than senior citizen) can be claimed for health insurance premium. You can also claim a tax deduction for the expense of health check-up up to Rs.5,000/-.
Very senior citizens can claim medical expenses up to Rs.30,000/- if the premium for health insurance is not paid. From AY 2019-20, deduction of medical expenses has been increased to Rs.50,000/- and is also available to senior citizens.
Deduction for payment of medical treatment of a person suffering from a specified disease can be claimed by resident individual or HUF. The expense should be incurred by the individual or HUF either for himself or for any dependent family member. The dependent family member includes spouse, children, parents, brother, sister.
The deduction shall be least of the following-
- Actual amount paid
- 60000/-(senior citizen) or Rs. 80000/-(super senior citizen) or Rs.40000/-(assessee below 60 yrs)
From AY 2019-20, the maximum deduction under 80DDB for both senior citizen and very senior citizen has been increased to Rs. 1,00,000/-.
80TTB (From FY 2018-19)
A senior citizen can claim the deduction of interest income on Fixed deposit, recurring deposit and savings account held in any bank, co-operative society and a post office up to Rs.50,000/-.
The excess of interest income above Rs.50,000 shall be chargeable to tax.
However, deduction of section 80TTA shall not be available.
6. Exempted Capital Receipt (loan under a reverse mortgage)
A reverse mortgage is a type of mortgage in which a homeowner can borrow money against the value of his or her home.
No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan.
Receipt of such loan is in the nature of a capital receipt. However, with a view to providing certainty in the tax regime to the senior citizen, section 10 of the Income-tax Act has been amended to provide that such loan amounts will be exempt from income tax.
- Pension received in India by a non-resident assessee from abroad is taxable in India. If, however, such pension is first received by or on behalf of the employee in a foreign country and later on remitted to India, it will be exempt from tax.
- Senior citizen means an assessee who is a resident and has attained the age of 60 years or above but less than 80 years at any time during the previous year.
- Super senior citizen means an assessee who is a resident and has attained the age of 80 years or above at any time during the previous year.
- The above benefits are not available to a non-resident taxpayer.