7 special tax benefits for seniors

There are certain tax advantages for senior citizens that they can benefit from. Apart from the tax advantages, the electronic income tax filing process has also been specially designed for them. Let’s take a look at the tax benefits available to seniors

Different tax rates

Income tax slab rates for seniors are different from those for non-seniors.

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Different slab rates for seniors

Exemption from interest income up to 50,000

CA Amit Gupta, MD, SAG Infotech said that beginning with the 2018-19 fiscal year, Section 80TTB came into effect and allows a deduction for the interest of 50,000. The amount earned on 50,000 will be taxed according to the Dalle Tariffs specially designed for Seniors. However, it is important to note that in such cases the deduction will not accrue under Section 80TTA of the 10,000 for interest on the savings account.

Deduction under section 80D for payment of medical insurance premiums

Section 80D allows non-senior citizens a deduction of 25,000 on the payment of medical insurance premiums, but for the elderly it is increased to 50,000. “The limit was 30,000 earlier, but in the 2018 budget it is increased to 50,000. In addition, Section 80D allows the deduction of not only the payment of the medical insurance premium, but also the actual expenses incurred for the treatment of the very elderly,” said Gaurav Kapoor, director and co-founder of Fincorpit Consulting.

Non-deduction of TDS on interest

If a senior’s total income is exempt from income tax and they have no tax payable for that fiscal year, they can submit Form 15H for non-deduction of TDS on interest on deposits term.

Additionally, with changes made via Budget 2018, the Section 194A tax deduction limit for seniors has also been increased by 10,000 to 50,000, said Amit Gupta.

Higher deduction under section 80DDB for a specified illness

Section 80DDB provides tax relief to taxpayers for expenses for the medical treatment of specified illnesses. Previously allowed deductions were 60,000 for seniors, but the 2018 budget increased it to 1,00,000.

No advance tax payment is required

Seniors with no earned income are exempt from prepayment of tax and only have to pay a self-assessment tax on all of their income.

No tax on the amount received under the Reverse Mortgage Scheme

With the reverse mortgage system, seniors get regular payments by mortgaging their home for life while ownership and possession stays with the senior. With this scheme, on the death of the borrower, the loan is repaid with the interest earned from the sale of the property and the balance obtained on the sale is passed on to the legal heirs. As part of this system, the sums paid by installments to seniors are totally exempt from income tax.

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