Indian government has created special provisions in the IT act to accommodate special tax benefits for Senior citizens who have attended 60 years of age during the financial year.
Please remember, after attending 60 years during the financial year, you will be eligible for tax benefits as prescribed for senior citizen otherwise normal provisions will be applicable to you.
From financial year 2011-2012 qualifying age limit to get eligible for senior citizen has been reduced from 65 years to 60 years.
Here are the 5 special tax benefits for senior citizen in India.
Higher basic exemption limit for senior citizen
Basic exemption amount is a limit up to which Indians are not liable to pay income tax. A normal basic exemption is Rs. 200000. To give special tax benefits for senior citizen, government of India has divided basic exemption limit to two categories.
In the first category, a senior citizen who is 60 years of age and below 80 years will be eligible for basic exemption limit of Rs. 250000.
In the second category, senior citizen of 80 years of age and above is eligible for basic exemption of Rs.500000. This category of persons are called super senior citizen in IT act.
Also read: Income Tax rates applicable for person below 60 years of age – Assessment year 2014-2015
Reverse mortgage scheme for senior citizen
Reverse mortgage scheme is the best benefit that is available to those senior citizens who are house owners and wants to keep their house in bank as mortgage to get monthly income. Such monthly income to senior citizen will not be taxable in the hand of the senior citizen.
Section 80D – Higher tax benefits for senior citizen
As a senior citizen, you will be eligible for a higher income tax deduction of Rs. 20000 per year towards amount paid for medical insurance instead of normal deduction of Rs.15000 per year. To get eligible, the person in whose name the premium has been paid must be a senior citizen. It does not matter who paid it.
Section 80DDB – Higher deduction limit for senior citizen
Similar to section 80D, under section 80DDB, a senior citizen will also be eligible for higher income tax deduction of Rs.60000 instead of the normal deduction of Rs. 40000 for the expenses borne on treating certain specified diseases like cancer, AIDS etc.
Also Read: How to claim income tax deductions on your medical treatment
Exemption in payment of advance tax
A senior citizen not having any income under the head “profits and gains from business or profession” is not liable to pay advance tax. In case a senior citizen is liable to income tax then that has to be paid in self assessment at the end of the financial year.
In addition to all these 5 special benefits, a senior citizen can also avail no TDS benefit on interest income earned on fixed deposits by submitting form 15H as prescribed under section 197 of IT act. After submitting form 15H bank will not deduct TDS from your interest income.