Tax Benefits That Senior Citizens Can Avail
As a senior citizen, while you are living a peaceful life and getting to spend more time with your loved ones, the monetary requirements do not halt with age. Your savings and returns from investments might be a legacy enough for your children and the generation ahead, it is always better to be prepared for the present. Investments such as insurance policies and stocks and other schemes will help you grow your wealth, but they can also get taxed under different income tax slabs. If you wish to the tax benefits that you can enjoy as a senior citizen, continue reading to know more.
What are the tax benefits for senior citizens?
The following are the benefits offered to you as a senior citizen:
- Under Section 80C
If you are senior citizen who has pays the premium for their life insurance, or has investments in PF or national savings certificate, you can enjoy an annual tax deduction of up to Rs. 1.5Lakhs under section 80C of the Income Tax Act. Under Section 80CCC, the deduction is applicable on payment made towards annuity plan. You can enjoy the benefit of this deduction on payment towards pension scheme.
- Under Section 80D
If you own a medical insurance, there are different tax deductions that you can enjoy on the premium payments, especially as a senior citizen. Under section 80D of the income tax act, senior citizens are offered a benefit on payment of health insurance premium up to Rs. 50,000. In case of your son/daughter having purchased the policy for you, appropriate tax deduction will be applied. If you are a super citizen, under section 80D, deductions on payment of premium and cost of treatment are allowed. You can use the income tax calculator to get an estimate for this.
If you have a disabled relative dependent on you for the payment of their medical treatment, you can avail tax deduction on payment of up to Rs. 75000, under Section 80DD. This deduction extends up to Rs. 1.25 Lakhs if the person being treated is disabled by 80% or more, i.e., severely disabled.
- Under Section 80U
If you are a senior citizen who is suffering from disability, you can claim deduction on your tax payments. You get a deduction of Rs. 75,000 for being disabled below 80%. If you are disabled by 80% or more, you can claim a deduction of up to Rs. 1.25 Lakhs under Section 80U.
- Under Section 80TTB
As a senior citizen, interest being earned on money deposited in an account is eligible for tax deduction. Under Section 80TTB, you can claim tax deduction on interest earned up to Rs. 50,000. Deposits made in savings accounts and fixed deposits are eligible for this deduction.
What other tax benefits can a senior citizen avail?
- Under Section 207 of the income tax act, if you are senior citizen, you are not required to pay advance tax on income that is not earned from any business or profession. However, self assessment tax is applied on the income you do earn.
- If you have mortgaged your house for income purposes, the payments that you receive from mortgaging your property are tax exempted.
- If you are senior citizen above the age of 75, you are exempted from filing ITR. If you are receiving interest and pension in the same bank account, you can enjoy this exemption. This exemption can only be availed if you do not have any other sources of income.
What is the tax exemption limit for senior citizens?
As per the old tax regime, senior citizens were classified into two categories: those between 60-79 are termed senior citizens, and those of 80 and above, who are termed as super senior citizens. In the old tax regime, the exemption limit on income for senior and super senior citizens was on income of Rs. 3-5 Lakhs. However, the limit has been reduced under the new tax regime to Rs. 2.5 Lakhs, which is common for all ages.
As you can see, you can avail these tax benefits if you are a senior citizen. If you wish to know more about the different income tax slabs that your income comes under, you can visit your financial advisor.