Pay less tax, as you grow older
Senior citizens get a number of tax benefits from the government; here is our ready resource to make you know your entitlements.
Higher exemption limits
Senior citizens (60+) get a direct benefit of higher exemption limits. The income exemption limit for senior citizens is Rs2,50,000. If you’re over 80, a super senior citizen, than you’re annual income upto Rs5,00,000 will not be taxed.
Here’s a snapshot of the slabs:
|Net annual income||Income tax rates for senior citizens||Income tax rates for super senior citizens|
|Up to Rs2,50,000||Nil||Nil|
|Rs2,50,000 – Rs5,00,000||10% of total income that exceeds Rs2,50,000||Nil|
|Rs5,00,000 – Rs10,00,000||Rs25,000 + 20% of total income that exceeds Rs5,00,000||20% of total income that exceeds Rs5,00,000|
|Rs10,00,000 – Rs1,00,00,000||Rs1,25,000 + 30% of total income that exceeds Rs10,00,000||Rs1,00,000 + 30% of total income that exceeds Rs10,00,000|
Some make the mistake of assuming that the top rate of interest for super senior citizens is 10%. However super seniors are taxed like the rest after the initial exemption of Rs5,00,000
No TDS on Interest Income
For senior citizens, whose total incomes fall in the zero tax brackets, no TDS will be deducted on the interest from their fixed-deposits. In order to avail this, they need to submit a Form 15H each year to the banks or institutions where they maintain their savings.
Exemption from Advance Tax
Unlike others, senior citizens who do not have any business income are exempt from paying any Advance Tax. They only need to pay the Self Assessment Tax before filing their tax returns for the financial year.
Higher Tax Deduction under Sec 80DDB – Medical Expenses
Senior citizens get Rs60,000 under this section as opposed to the maximum limit of Rs40,000 for those under 60. However, the deduction is only applicable if the medical expenses haven’t been reimbursed by a Mediclaim policy. If there has been a partial reimbursement, then the balance amount can be claimed for deduction under Sec 80 DDB.
Higher Tax Deduction on Medical Insurance
As a senior citizen you can avail a maximum tax exemption of Rs20,000 upon buying a medical insurance policy as against the Rs15,000 that people below 60 can avail. This exemption of Rs20,000 can also be claimed by persons who purchase medical insurance policies for their parents, who are over 60 years old.