The Income Tax (I-T) law offers special tax benefits to resident senior citizens and super senior citizens. While a person between 60 and 80 years of age is termed as a 'senior citizen', a person above 80 years of age is called a 'super senior citizen'.

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Here are some of the most common income tax benefits available for senior citizens:

Higher exemption limit

Senior citizens and super senior citizens are granted a higher exemption limit as compared to normal taxpayers. Exemption limit is the quantum of income up to which a person is not liable to pay tax.

While, individuals having an annual income of up to Rs 2.5 lakh are not required to file income tax returns, for senior citizens, the limit is Rs 3 lakh and for super senior citizens, the limit is Rs 5 lakh.

Thus, it can be observed that an additional benefit of Rs 50,000 in the form of a higher exemption limit is available to a resident senior citizen as compared to normal taxpayers.

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Additionally, if the income is below the taxable limit and TDS is deducted on the fixed deposit (FD) interest by bank, they can claim the credit of TDS by filing an income tax return or filing form 15G/H.

Tax rebate on health insurance premiums

Up to Rs 50,000 paid towards the annual premium of a health insurance policy as a senior citizen is eligible for a tax rebate.

No advance tax

As per section 208 of the Income Tax (I-T) Act, every person whose estimated tax liability for the year is Rs 10,000 or more, will pay his/her 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 not having any income from business or profession is not liable to pay advance tax, according to Income Tax website.

Benefits on interest income

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 up to Rs 50,000 earned by the senior citizen. Interest earned on saving deposits and fixed deposit, both will 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 post-office or a co-operative bank to a senior citizen up to Rs 50,000. Therefore limit is to be computed for every bank individually.

First Published:Nov 17, 2020 5:41 PM IST