August 11, 2016

Tax benefits for senior citizens and super senior citizens

There are certain tax benefits for senior citizens and super senior citizens. In this post, let us try to understand who are considered as senior citizens and super senior citizens. Also, I will explain you the tax benefits available to such category of individuals.

First, let us understand who are senior and super senior citizens as per tax law.

Meaning of Senior Citizens and Super Senior Citizens for tax benefits

As per the Income Tax Act, 1961, a ‘Senior Citizen’ has been defined as an individual who attains the age of 60 years at any time during a financial year.

Let us say Mr.X born on 15th August, 1956 will complete 60 years from the financial year 2016-17. So he can avail all tax benefits available for senior citizens from FY 2016-17.

As per the Income Tax Act, 1961, a “Super Senior Citizen” has been defined as an individual who attains the age of 80 years at any time during a financial year.

Let us say Mr.Y born on 15th August, 1936 will complete 80 years from the financial year 2016-17. So he can avail all tax benefits available for super senior citizens from FY 2016-17.

What if an individual born on 1st April?

It is easy to calculate the age of the person to test whether they are eligible for the senior citizen or super senior citizen. However, what if the person born on 1st April?

For example, let us say Mr.X born on 1st April, 1956. In that case, whether he will be eligible for senior citizen tax benefits in the financial year 2015-16 or 2016-17.

Because few feel he completes 60 years of age on 1st April, 2016. Few have an opinion that he will complete it on 31st March, 2016 itself.

Income Tax Department clarified this doubt recently. The notification says “A person born on 1st April would be considered to have attained a particular age on 31st March, the day preceding the anniversary of his birthday”.

What are the Tax benefits for senior citizens?

X Tax benefits for senior citizens

Now let us get back to the main topic of this post. What are the special tax benefits for senior citizens.

# Benefits in Tax Slab Rates

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You notice from above table that for the resident individuals who are above 60 years of age but below 80 years of age, the minimum tax slab starts from Rs.3,00,000. This is around Rs.50,000 more than the other individuals. Therefore, Rs.50,000 is the tax benefits for senior citizens.

For resident individuals whose age is above 80 years, minimum tax slab starts from Rs.5,00,000. Therefore, any income up to Rs.5,00,000 is tax-free for those age group individuals. Notice the next tax slabs. It is higher for these categories of people. Hence, a higher tax benefits.

Remember that this exemption limits for resident individuals ONLY.

# Tax Benefit for Health Insurance under Sec.80D

Preventive Health Check Up Tax Benefits

You notice that up to Rs.30,000 can be claimed as tax benefits for senior citizens in case they paid the premium for health insurance.

However, let us say your age is above 60 years of age and you are paying health insurance premium for your family and parents, then you can claim the tax deduction up to Rs.60,000.  For you and your family (spouse, dependent children) Rs.30,000 and for your parents Rs.30,000 (whether parents dependent or not dependent).

# Deduction for medical treatment under Sec.80DDB

A resident individual or a resident HUF can claim deduction under Sec.80DDB. You can claim deductions if you incurred expenditure for the medical treatment of a specified disease or ailment as prescribed by the Board. The ailments eligible for deductions are as below.

1) Neurological Diseases where the disability level has been certified to be of 40% and above-

  • Dementia
  • Dystonia Musculorum Deformans
  • Motor neuron Disease
  • Ataxia
  • Chorea
  • Hemiballismus
  • Aphasia
  • Parkinsons Disease

2) Malignant Cancers

3) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)

4) Chronic Renal failure

5) Hematological disorders

  • Hemophilia
  • Thalassaemia

Expenditure should be incurred for medical treatment of the assessee himself or wholly/mainly dependent husband/wife, parents, brothers and sisters of the individuals (any member of the family in the case of HUF).

The permissible deduction under Sec.80DDB is actual expenditure on medical treatment of Rs. 60,000 ( in case of senior citizens) and Rs.80,000 (for super senior citizens).

For rest of individuals and HUF the limit is Rs.40,000.

Deduction under this section will be reduced by the amount received, if any, under health insurance from insurance company, or reimbursed by an employer, for the medical treatment of the person.

You have to obtain a prescription from a specialist doctor for the purpose of availing deduction under this section.

# Relief from Advance payment of tax

Every person is liable to pay advance tax if tax payable is Rs.10,000 or more than that. All types of income sources are liable for payment of advance tax.

However, there is a relief for senior citizens. If senior citizens (including senior citizens) not having any income from business/profession, then they not liable to pay advance tax.

# Relief from e-filing of Income Tax for Super Senior Citizens

A super senior citizen who is using ITR Forms of 1/2/2A and total income is more than Rs.5,00,000 or refund income, then such individuals can file their IT return in physical mode also.

It is purely his wish to file either in physical mode or can use e-filing option.

Refer the Income Tax Department clarification on the same.

# Avoid TDS by submitting Form 15H

If your total income not exceeding the basic exemption limit and if your estimated tax liability for the current financial year is NIL, then you can submit Form 15H and AVOID TDS.

However, do remember that avoiding TDS does not mean avoiding tax. Such income is still considered as taxable income.

I explained on how to fill Form 15H in below post.

# Tax Benefit on Reverse Mortgage Home Loan

Reverse Mortgage Loan (RML) enables a Senior Citizen i.e. above the age of 60 years to avail of periodical payments from a lender against the mortgage of his/her house while remaining the owner and occupying the house.

Any periodical amount received under this loan is not called as income or annuity. Hence, such periodic loan receivable is tax-free for senior citizens.

Refer some earlier posts related to tax benefits-

22 Comments

  1. Very informative blog for seniors people and take care of their financial things. All the best for this work.

    Reply
  2. Very comprehensive article. Thanks. Can you kindly re-confirm your statement that the monthly payment from REverse mortgage is not taxable? Is this true in the case of Reverse Mortgage linked Annuity plan as well? I heard it other way.

    Reply
  3. Very informative!! My father is a super senior citizen and does not have a health insurance.
    1) Can regular medicine costs (e.g. BP, Sugar) be covered under medical treatment expenses?
    2) Can these costs be paid in cash?

    Reply
  4. My mother is 91yr old and is confined to the house after hip fracture and operation in July 2015. Rs 30000/ was claimed in /AY 2016-17. Now she needs round the clock care with nursers and caretakaers. What are the deductions she can claim in AY 2017-18?
    In appreciation of your input.

    Sudha K

    Reply
    • Sudha-The available benefits are explained in above post already.

      Reply
  5. Sir I am government employee and pay tax. I fill itr 1 . my wife is a private tutor & her income is around 1.2 lakh. & also some fixed deposit my wife around 5 lakhs. She get interest around 40000/- my question is .. Is my my wife can submitted income tax return ? Which form she fill up ? & how she can prove her private tution income ?

    Reply
    • Saheb-She can use ITR4. Yes, even though tax liability is zero, it is always best to file IT returns.

      Reply
      • sir
        But I am a government employee.I have prove my income form by form 16. But she is a private tutor. How can she prove her income.

        Reply
        • Saheb-Proving income for business is based on declaration. In your wife case, she can’t prove as there will cash receipt in her income.

          Reply
  6. Hi Basav,

    I have a max gain account with book balance as a positive amount. I have paid all the out standing amounts plus one emi extra. Is it necessary to pay further emi. I don’t want to close the account to have some liquidity.

    Reply
    • Amol-Yes, because you not closed the loan and your principal is still due but not paid.

      Reply
  7. Very nicely explained…Infographic on Section 80 D clears all the doubts associated with claiming deduction for health insurance. Just one query,what all is covered in preventive health check up ? I mean even a routine checkup will qualify for this deduction ? What if we make a cash payment for health check up? Is it covered under section 80 D.

    Reply
  8. GREAT WORK SIR

    Reply
      • I about 45 year old. I have small business . approx income about 1.5 lakh . fixed deposit about 13 lakh, which I accumulate from saving about past 20 year. My fixed deposit income around 1.2 lakh. But I deposit 15 G . I have some ppf , nsc . but my income is not taxabale. I never filled income tax return. Can I filled now ? Which form I filled.

        Reply

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