How Indian seniors can slash taxes and save lakhs
What's the story
India offers several tax benefits to senior citizens under the Income Tax Act, 1961. These benefits are designed to minimize their tax liability and provide financial comfort during their retirement years.
Being aware of these benefits can assist senior citizens in planning their taxes more effectively and ultimately save more.
Exemption threshold
Higher exemption limit
Senior citizens (aged 60 years and above) enjoy a higher basic exemption limit compared to non-senior individuals.
In the current financial year, while the exemption limit for individuals below 60 is ₹250,000, for senior citizens it stands at ₹300,000.
So, if you are a senior citizen, you can earn up to ₹300,000 without incurring any income tax liability.
Section 80D benefit
Enhanced deduction on medical insurance premiums
Senior citizens can claim a higher deduction under Section 80D of the Income Tax Act for medical insurance premiums paid.
The limit of deduction for health insurance premiums paid for senior citizens is ₹50,000 per annum, compared to ₹25,000 for other individuals.
This allows them to reduce their taxable income further if they are paying health insurance premiums.
Interest income relief
Exemption on interest income
Under Section 80TTB of the Income Tax Act, senior citizens enjoy a higher exemption limit on interest income earned from deposits in banks and post offices.
They can claim a deduction of up to ₹50,000 on interest income generated from these sources.
This advantage is thoughtfully crafted as many seniors depend on interest income as a key component of their retirement fund.
Ease in tax payment
No advance tax payment requirement
Elderly people (above 60) who do not have any income from business or profession need not worry about paying advance tax.
Usually, taxpayers have to pay taxes in four installments during the year if their tax liability is more than ₹10,000. However, this exemption spares seniors the hassle of managing periodic advance tax payments.
Section 80DDB benefit
Deduction for medical treatment expenses
Section 80DDB provides deductions for expenses incurred on medical treatment of specified diseases or ailments, either for oneself or dependents.
The government has increased the deduction limit for senior citizens to ₹100,000 regardless of the actual expenses incurred.
This provision significantly helps them financially during difficult times when dealing with critical illnesses that often require costly treatments.