What are Special Income Tax benefits for Senior Citizens and Super Senior Citizens?
Lets answer all your queries regarding special income tax benefits for Senior Citizens and Super Senior Citizens and the amendments made in the IT law in the recent times.
Q. Who is a Senior Citizen as per INCOME TAX?
A. As per Income Tax Act 1961, an individual is treated as senior citizen once he attains the age of 60 years or more and he will be treated as super senior citizen once he attains the age of 80 years or more.
Q. What if you were born on 31st March or on 1st’ April? In which F.Y. will you be considered as a senior Citizen or a Super Senior Citizen for Income Tax?
A. Let’s say you were born on 31/03/1962: then you have completed your 60 years in the FY 21-22 it self, therefore for the FY 2021-22 you will be treated as a Senior Citizen for Income Tax. But if you were born on 1st April, 1962 then you will be treated as Senior Citizen in the FY 2022-23.
Q. What are the special income Tax benefits for Senior Citizens and Super Senior Citizens?
A. Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal tax payers. Exemption limit is the quantum of income up to which a person is not liable to pay tax. The exemption limit granted to senior citizen and very senior citizen is as follows :
Senior Citizen: A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2020-21 available to a resident senior citizen is Rs. 3,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal tax payers.
Super Senior Citizen: A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2020-21 available to a resident very senior citizen is Rs. 5,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000 in the form of higher exemption limit is available to a resident very senior citizen as compared to normal tax payers.
Q. Do Senior Citizens have to file Income Tax Return?
A. As per new amendments in Income Tax Act, 1961, from budget 2021, senior citizens aged above 75 years need not file their Income Tax Returns.
Income-tax Act, 1961 provides no exemption to senior citizen or very senior citizen from filing of return of income. However, to provide relief to the senior citizens (whose age is 75 years or more) and to reduce the compliance burden on them, the Finance Act, 2021, has inserted a new Section 194P.
This provision requires a banking company to deduct tax under this provision if deductee is maintaining an account with it in which he is receiving his pension income. The tax is required to be deducted under this new provision if the recipient is a resident individual whose age is 75 years or more at any time during the year and the following conditions are fulfilled:
a) Total Income of the deductee consists only income in the nature of pension and interest received or receivable from any account maintained with deductor (such bank); and
b) Deductee has furnished a declaration to deductor containing prescribed particulars.
If the above conditions are satisfied, the deductor shall compute the income of deductee after giving effect to the deduction allowable under Chapter VI-A and rebate under Section 87A. Tax on such income is required to be deducted on the basis of rates in force.
If tax is deducted from the income of such senior-citizen, he shall not be liable to furnish the return of income for the previous year in which tax has been deducted.
Q. Is a Resident Senior Citizen granted exemption from payment of Advance Tax?
A. As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, section 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207 a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.
Q. What are the benefits available in respect of interest on deposits in case of senior citizens?
A. Section 80TTB of the Income Tax law gives provisions relating to tax benefits available on account of interest income from deposits with banks or post office or co-operative banks of an amount upto Rs. 50,000 earned by the senior citizen (i.e., an individual of the age of 60 years or above). Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.
Section 194A of the Income Tax law gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or ppost-office or co-operative bank to a senior citizen up to Rs. 50,000. Therefor limit is to be computed for every bank individually.
Q. What are the benefits available in respect of expenditure incurred on account of medical treatment of specified diseases on treatment of a senior citizen?
A. Section 80DDB of the Income-tax Law gives various provisions relating to tax benefits available on account of expenditure on medical treatment of specified diseases. Click the following link to know about details of section 80DDB which covers the details of special benefits under section 80DDB available to a senior citizen.