The income tax law of India grants several benefits to senior citizens and very senior citizens. Note that only resident senior citizens can avail these tax benefits through ITR Filing. As per the Income Tax Rules, a person within 60 years and 80 years of age are considered as a ‘senior citizen’ and a person above 80 years of age is categorised as ‘very senior citizen. In this article, we will discuss the Income Tax Benefits for Senior Citizens and its impacts.
Income Tax Benefits for Senior Citizens
1. Tax exemption limit:
Senior citizens have acceded a greater exemption limit associated with regular taxpayers or non-senior citizen taxpayers. The exemption frontier for non-senior citizen is Rs 2.5 lakh. However, for FY 2020-21, the exemption limit for a senior citizen is Rs 3 lakh meaning further benefit in the form of Rs 50,000 is accessible to a resident senior citizen. Very senior citizens are allowed a higher exemption limit of Rs 5 lakh.
2. Advance tax exemption:
As per section 208 of the Income Tax Act, every person whose assessed tax liability for the financial year is Rs 10,000 or more, shall pay the tax in advance, in the form of ‘advance tax’. However, section 207 of the I-T Act offers some assistance to senior and super senior citizens from payment of advance tax. A resident senior citizen not possessing any income from business or profession is not inclined to pay advance tax.
3. Standard Deductions from Pension Income:
Senior citizens are allotted a standard deduction of Rs 50,000 on account of their pension income.
4. No tax under the Reverse Mortgage Scheme:
A senior citizen may convert mortgage any of his accommodation to make monthly earnings. The ownership of the property persists with the senior citizen and they are proffered monthly payments for it. The amount paid in parts to the owner is exempted from Income Tax.
5. Tax Deduction benefits:
- Interest earned on bank deposits
- Payment of insurance premium
- Medical treatment
Why should Senior Citizens possess special Income Tax Benefits?
The government managing for senior citizens to keep the culture and moral benefits intact offer special income tax perks for senior citizens. Their idea is to assist them from stress at this phase of life. If you or your senior citizen parents are preparing their funds, then it is crucial to know about the tax benefits for senior citizens that can be availed.
If you want any other guidance concerning ITR Filing, please feel free to talk our business advisors at 8881-069-069.
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