Income tax benefits for senior citizens (FY 2018-19)

Income tax benefits for senior citizens (FY 2018-19)

1. Higher Basic Exemption Limits for senior citizens under income tax

For ordinary individual tax payers the basic exemption limit, upto which he is not required to pay any tax, is presently capped at Rs. 2.50 Lakhs. However for resident senior individual citizens who have completed the age of 60 years and yet to complete 80 years  the limit is Rs. 3 lakhs. For resident individual tax payer over 80 years does not have to pay any tax upto Rs. 5 lakhs annual income.

2. Higher Deduction limit under Section 80D for senior citizens under income tax
For all senior citizens deduction upto Rs. 50,000/- for health insurance premium can be claimed by themselves or their children. From current year, in case the senior citizen does not have any medical insurance, deduction upto Rs.50,000/- can be claimed for any medical expenses including day to day expenses as well as for hospitalization. Earlier this benefit was available to only for the senior citizens who had completed 80 years of age.

3. Higher Deduction Limit for interest from Banks and Post Office under Section 80TTB for senior citizens under income tax

Upto last year a deduction upto Rs. 10,000 was available in respect of interest from saving bank account but from current year all the senior citizen can claim  deduction not only for saving bank interest but also for  interest on any deposit with post office or bank and that upto Rs. 50,000/- in a financial year. So now from current year senior citizens will be able to claim enhanced deduction upto not only on fixed deposits but also on the deposits made under Senior Citizen Savings Scheme(SCSS). The law has also been changed to provide that the no tax deduction at source will happen for senior citizen as long as interest on all these deposits for all the branches of a bank taken together does not exceed Rs. 50,000/- in a year. While arriving at the amount of Rs. 50,000/- interest on saving bank account shall be excluded as there is no provision for tax deducting at source on it irrespective of amount credited during the year. So a senior citizen has to submit form No. 15H only if he wants to receive the interest without deduction of tax at source and such interest exceeds Rs.50,000 in  a year.

Particulars Section 80TTA Section 80TTB
Applicability Applicable to individuals and HUF except senior citizens Applicable to senior citizens
Specified income Interest on savings account only Interest on all kinds of deposits
Quantum of deduction Upto Rs 10,000 Upto Rs 50,000

4. Higher Deduction limit under Section 80DDB for senior citizens under income tax

Tax laws allow the tax payers a deduction in respect of expenses incurred for medical treatment of self or dependent relatives. For general tax payers the amount of deduction available is Rs. 40,000/- but in case the expenses are incurred in respect of a senior citizen the entitlement goes to Rs. 1 lakh in a year.

5. Exemption from Payment of advance tax to senior citizens under income tax

In case your tax liability after reducing the amount of TDS is more than Rs. 10,000/- in a year, you are required to pay advance tax in four instalments. However senior citizens are exempted from requirement of payment of advance tax provided they  do not have any income under the head “Profits and Gains of Business or Profession”. The senior citizen can discharge their tax liability at the time of filing their ITR.

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