The government has given much-needed consideration to those above 80 years of age, also termed as super seniors, by relaxing Income Tax rules for them. Here are a few ways one can save tax as a super senior in India:
1. Minimum taxable income: Super seniors generally receive income either as pension from their former employers or rent paid by tenants on a property that is owned by them. Apart from this, they also earn interest from deposits such as a savings account, fixed deposit(FD) or recurring deposit(RD) that they use as a tool to invest their savings. A significant tax benefit for super senior citizens is the revised income tax slabs with effect from the financial year 2018-19. As per the new rate, a yearly income equal to or below ₹ 5 lakhs is effectively tax-free. Income between ₹ 5lakhs to ₹10 lakhs is taxed at 20%, while a tax rate of 30% applies to income over and above ₹ 10 lakhs.
2. Increase in exemption on interest income:One can save tax as a super senior under Section 80TTB upto a maximum of ₹ 50,000 on income earned as interest from FD, RD, Post Office scheme, Senior Citizen Savings Scheme and savings account. This comes as a relief, considering most of them rely on these sources for a steady inflow of cash to fund their day to day needs. Earlier interest income for everyone, including super seniors, was calculated as per Section 80TTA, which placed them at a disadvantage.
3. Get more health coverage:The limit for health insurance premium has been increased by ₹ 20,000 to ₹50,000 under Section 80D, allowing tax benefit for super senior citizens. Health can be a significant concern for those above 80 years of age. This provision encourages them to opt for a better health cover with a comprehensive coverage by paying more and still save tax as a super senior. The tax benefits of Section 80D are also applicable to those buying health insurance for their super senior parents.
4. Medical expenses:Those suffering from a critical illness such as cancer, heart disorders, kidney ailments and several others can now claim more deduction towards their medical costs. Super senior citizens can now claim upto ₹1 lakh under Section 80DDB towards medical expenditure unlike ₹80,000 earlier. This move is aimed at reducing the financial burden of super senior citizens as well as ensuring that their health needs are taken care of.