Here are the key benefits for senior citizens that you must be aware of.
Friendly tax slab rates for senior and super-senior citizens
When it comes to payment of income tax, the government has defined special concessions for people above the age of 60 to reduce their tax burden.
|Particulars||Senior Citizens (60+)||Super Senior Citizens (80+)||Regular Taxpayers|
|Tax Free Slab||Up to Rs3 lakh||Up to Rs5 lakh||Up to Rs2.50 lakh|
Interest exemption under Section 80TTB for senior citizens
This benefit has been extended to senior citizens in two ways: one is financial and the other is procedural. Let us look at both the benefits for senior citizens. Effective the Union Budget of 2018-19, the interest exemption limit on deposits has been increased from Rs10,000 to Rs50,000 per annum.
This is a great relief for senior citizens who depend on interest income for their post retirement expenses. The second benefit is more procedural but important nevertheless. Prior to Union Budget 2018-19, senior citizens were liable for deduction of TDS on interest income. TDS could be avoided by submitting Form 15-H to the bank in advance. However, if someone forgot to submit Form 15-H, the TDS would be deducted and the person would have to file returns to claim a tax refund. This was, by itself a cumbersome process. To simplify this aspect, the government announced in the last budget that there would be no TDS for senior citizens and no Form 15-H would be required. Of course, if the interest is above Rs50,000 annually, the onus is on the individual to pay the tax.
Additional tax deduction on health insurance premium for senior citizens
Premiums paid on recognized health insurance policies for self, family, and parents are eligible for deduction under Section 80D. This deduction was Rs25,000 for regular taxpayers and Rs30,000 for senior citizens till Budget 2018. In the last latest Budget, however, the government has increased the limit for senior citizens to Rs50,000 per annum. Hypothetically, if you are 61 and your parents are above 80, the effective deduction under Section 80D goes up to Rs1,00,000 per annum.
There is one more benefit pertaining to treatment of specific diseases under Section 80DDB. Till Union Budget 2018, an exemption of Rs60,000 for senior citizens (above 60 years) and Rs80,000 for super senior citizens (above 80 years) was available for medical treatment expenses for specified diseases. The revised limit under Section 80DDB stands enhanced to Rs1,00,000 per year for all citizens above 60 years of age.
Standard Deduction benefit and no advance tax liability on senior citizens
In the past, standard deduction used to be available only to working people. Budget 2018 has provided for a flat standard deduction of Rs40,000 to every taxpayer, including senior citizens. Senior citizens earning post retirement pension are also eligible for standard deduction. Further, unless the senior citizen is in business, they are exempt from advance tax.
Special benefit under reverse mortgage scheme for senior citizens
Reverse mortgage is a special scheme for senior citizens wherein they can monetize their property value and get EMIs in return. The amount paid regularly to the senior citizen under the reverse mortgage scheme is entirely exempt from tax in the hands of the senior citizen.
There are a plethora of benefits that the government has made available for senior citizens so that they can enjoy a peaceful and hassle-free retirement.