Tax planning for senior citizens: Know how you can save more on taxes

Tax planning for senior citizens: Know how you can save more on taxes

As per the Income Tax Act, an individual is considered a senior citizen on attaining 60 years of age. Here are few exemptions and deductions available for senior citizens for the current financial year

 Tax planning for senior citizens: Know how you can save more on taxes

New Delhi: Senior citizens in India are given special privileges so far are income tax rules are concerned. They not only get higher interest on term deposits but also enjoy higher exemption limit — quantum of income on which income tax is not levied — while paying income tax. Senior citizens can save more on taxes if they plan ahead making use of all the available exemptions and deductions in the best possible manner. As per the Income Tax Act, an individual is considered a senior citizen on attaining 60 years of age. Here are few exemptions and deductions available for senior citizens for the current financial year.

Higher exemption limit

For the financial year 2019-20, the exemption limit available for senior citizens is Rs 3 lakh as compared to Rs 2.5 lakh for the non-senior citizens. It means their income above the threshold of Rs 3 lakh will be taxed. An individual aged 80 years or more is granted an even higher exemption limit of Rs 5 lakh.

Tax benefit on interest income

Interest income earned by senior citizens from term deposits with banks or post office or co-operative banks up to Rs 50,000 is exempt from income tax under Section 80TTB. Interest earned on savings bank account also comes under this Rs 50,000 limit. Non-senior citizens get income tax exemption on interest income up to Rs 10,000 earned from savings accounts.

Relief from TDS

As per Section 194 of the Income Tax Act 1961, TDS will not be deducted on interest income up to Rs 50,000 earned by senior citizens. This interest income includes deposits with banks, post offices, co-operative banks and others.

Relief on advance tax payment

Every resident individual whose tax liability for a financial year is Rs 10,000 or more, is required to pay tax in advance according to Section 208. However, senior citizens, as per Section 207 get relief from payment of advance tax. Resident senior citizens having income other than “profits and gains from business or profession” shall not be liable to pay advance tax and they are allowed to discharge their tax liability (other than TDS) by payment of self-assessment tax.

Tax benefits on health insurance

As per provisions of Section 80D, senior citizens can avail tax benefits on health insurance premium payment up to Rs 50,000 for the current financial year. This benefit can be claimed by any assessee if he is paying health insurance premiums for self (in case he is a senior citizen), and/or dependent senior citizen parents. This benefit includes preventive health check-up costs up to Rs 5,000.

Tax benefit on medical expenses

As per Section 80DDB, an assessee is eligible to claim deduction on medical expenses done on specified diseases in a financial year for self or on dependent children, spouse, parents, brother or sister. This deduction is available up to Rs 40,000 if the dependent is a non-senior citizen. If the dependent is a senior citizen then the allowed deduction is Rs 1 lakh

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