Senior persons in the country should be aware of the benefits and rules that are unique to them under the Income Tax Act, of 1961, to ensure a more seamless tax filing process as the deadline for filing returns draws closer.
In India, a person is classified as a senior citizen if they are 60 years of age or older but less than 80 at any point during the fiscal year, and as a super senior citizen if they are 80 years of age or more.
For elderly and super senior persons, the Income Tax Department of India provides several exemptions, deductions, and advantages to lessen their tax obligations.
Senior Citizen Tax Regimes and Exemption Limits
The old and the new tax regimes are the options available to senior people. Chapter 6A of the previous tax code permits deductions. These deductions are not allowed under the new tax system, but the tax rates are different.
Understand the Differences Between EPF, VPF, and PPF
A basic exemption limit of Rs 3 lakh would apply to senior individuals aged 60 to 79, while a basic exemption limit of Rs 5 lakh will apply to super senior citizens aged 80 and beyond. The tax rates are subject to change; there is no tax on income under Rs 3 lakh and a 30% tax rate on income beyond Rs 10 lakh.
What are Senior Citizens’ Benefits from Income Tax?
- Deductions for health insurance premiums up to Rs 50,000.
- Medical costs deductions for specified diseases up to Rs 1 lakh.
- TDS exemption is given if the total income is less than Rs 5 lakh, and interest income from savings and fixed deposits up to Rs 50,000 is free from TDS.
- Capital gains exemptions under the Reverse Mortgage Scheme.
- Seniors who do not have business income are not required to pay advance tax.
Filing Income Tax Returns
Seniors have the option of filing their income tax forms online or manually.
- ITR 1 (Sahaj) is the form that pensioners who make less than Rs 50 lakh can file.
- Pensioners with business or professional income should file using ITR-3 or ITR-4, while those with income from capital gains, other sources, or property should use ITR-2.
Special Provision under Section 194P
Seniors who are 75 years of age or older and who solely receive interest and a pension from a designated bank may file Form 12BBA with their bank. After that, the bank will compute income tax and deduct it, saving them from having to file an ITR.
