Tax Sops for Senior Citizens

Senior citizens form a special class for the purposes of taxation. This article will attempt to summarize tax compliance for people over 60 years of age.

Am I a Senior Citizen if I will be 60 years old in the current Financial Year?

A senior citizen is one who is at least 60 years of age in the year that is being assessed for levy on income. This income includes pension.

What is the threshold income for tax exemption for this category?

However, the lower limit exempt from tax is INR 300,000 in a year for those between 60 and 80 years. This limit goes up to INR 500,000 in a year if you are over 80 years old. The tax department considers this second sub-category to be ‘Super-Senior Citizens’.

Deduction under Section 80D

Senior citizens can avail deductions of up to INR 20,000 against medical insurance premium where those in the age group of 0 to 60 years are only given Rupees 15,000 a year.

Further, the cost of a particular treatment also qualifies for tax exemption up to INR 60,000 a year for those between 60 to 80 years and INR 80,000 for those over 80 years of age.

Exemption from payment of Advance Tax

The retired category is also eligible for claiming exemption from paying advance tax as long as there is no income from business for the individual.

That means there is no interest on arrears under Sections 234B (non-payment of advance tax) and 234C (deferment of advance tax).

Relaxation in Scrutiny

This class of citizens will not be subjected to tax scrutiny unless a tax officer has reasonable evidence of wrongdoing. This is applicable to seniors and small taxpayers who use ITR-1 and ITR-2 to file their returns according to the Income Tax Department notification reference 402/92/2006-MC (07 of 2011).

Relief from TDS on interest income:

If you are over 60 years of age, you can also claim exemption from paying income tax via TDS at source on interest income. The interest may be accrued on Savings bank of Fixed Deposits.

You need to apply for exemption using Form 15H (Section 197 of the Income Tax Act, 1961).

All these benefits are aimed at easing the burden on the elderly as they incur greater costs on maintaining their health than other citizens and may not have people to take care of tax matters for them.

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