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Special Income Tax benefits for senior and super senior citizens

Income Tax benefits for senior and super senior citizens

The government has recognized the importance of easing out the financial burden of those in their retirement years. This has been reflected in the budget proposals of 2018 and 2019, both of which have introduced several changes that offer tax benefit to senior citizens as well as super senior citizens along with health protection.

For income tax purposes, those above the age of 60 and below 80 years are classified as senior citizens whereas those above 80 years of age are termed as super senior citizens.

First, it is crucial to fully understand the distinction in tax benefits for senior and super senior citizens. Let us understand this by way of a table:

Income Tax Slabs Tax Rate Health and Education Cess
  Senior Citizens Super Senior Citizens Senior Citizens Super Senior Citizens
Up To ₹3 lakh No tax No tax No tax No tax
₹3 lakh–₹5 lakh 5% No tax 4% of Income Tax No tax
₹5 lakh–₹10 lakh 20% 20% 4% of Income Tax 4% of Income Tax
More than ₹10 lakh 30% 30% 4% of Income Tax 4% of Income Tax

Source: Karvy Report

As we can see in the given table, for senior citizens between 60 to 80 years of age, an annual income of upto ₹3 lakhs in a financial year would be tax free. Whereas if you are a super senior citizen, that is above the age of 80, the limit has been raised to ₹5 lakhs. There are different tax slabs for both senior and super senior citizens beyond this exemption limit as well.

Next, let’s understand the various instruments through which senior and super senior citizens can claim deductions:

  • Interest income from deposits: Income earned as interest from a fixed deposit in a bank or post office deposit upto a maximum of ₹50,000 qualifies for deduction from your annual income under Section TTB. This is one of the tax benefits that come as a huge relief - since most of them rely on such deposits.
  • Medical expenses: Spiraling costs of treatment in Indian hospitals can eat into your retirement corpus. Don’t worry. You can save tax as a senior or super senior citizen by claiming upto ₹1 lakh for the amount spent on treatment of specified diseases, such as cancer, stroke etc under Section 80DDB.
  • Increased TDS limit: TDS on deposit interest was raised to ₹40,000 which means that even if you invested in a FD of upto 6 lakhs at an interest rate of about 7% per annum, you save tax as a senior or super senior citizen since no TDS will be deducted.
  • Fill form 15H: This will help if you have a high interest income from a bank deposit. All you need to do is submit a form termed 15H to the banker. This form is nothing but a declaration that can help you claim certain receipts without deduction of tax.
  • Health insurance premium: Upto ₹50,000 paid towards the annual premium of a health insurance policy as a senior citizen is eligible for tax rebate.

Remember to avail these tax benefits for yourself if you are a super senior or a senior citizen or even if you are filing it for your parents.

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