That being said, this bottleneck was recognized by the Indian Government. During his 2018 Budget speech, the then Finance Minister Arun Jaitley, was earnest in saying that it is the duty of the young Indian populace to attend to those who have had stood by them as a pillar of strength. This was clearly hinted at senior citizens, and eventually, a slew of tax benefits was introduced so that they could maintain a higher net income (post-tax) at their disposal.
Senior citizen categoriesThere are two categories of senior citizens, as per the IT Act, 1961:
- Senior citizens
Any individual aged 60 years or more, but less than 80 years (at any given time during a FY) is classified as a senior citizen.
- Super senior citizens
Any individual aged 80 years and more (at any given time during a FY) is classified as a super senior citizen (or very senior citizen).
Tax benefits available:
- Tax Deductions on interest earned from bank deposits The thing to bear in mind is that interest on post office and fixed deposits is one of the primary sources of income for senior citizens. This is, of course, taxable. The exemption limit on interest earned from FDs for senior citizens was raised to Rs. 50,000 from the earlier Rs. 10,000 in the Union Budget 2018.
- Increased benefits for expenses arising from healthcare With increasing age, medical and healthcare-related expenditure rises as well. A deduction of Rs.50,000 per year can be claimed by senior citizens towards premiums on health insurance. When it comes to critical illnesses in particular, senior citizens would be able to claim deductions up to Rs.1 lakh on medical expenditure.
- Reduced tax compliance When it comes to tax compliance, certain provisions are directed at senior citizens with an objective to reduce the burden. To start with, senior citizens can choose not to pay ‘advance tax’ during the financial year. Moreover, should they not have a regular business income, they are completely exempted from paying advance taxes.
Moreover, TDS is now applicable for deduction, only should interest income exceed Rs.50,000 within one FY. Should total income be less than the threshold, you can furnish Form 15H to the bank, asking for non-deduction of TDS.
In conclusion, should you be a senior citizen, make sure that your tax returns have been filed in keeping with every tax exemption provision mentioned above.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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