Here are 5 ways senior citizens can avail of special tax benefits

The Income Tax Department offers certain special tax benefits to senior citizens. An individual between 60 and 80 years is considered a senior citizen. A person above 80 years of age is a very senior citizen. Here's all you need to know about special offerings by the Income Tax of India to senior and very senior citizens. All these benefits are available to resident citizens only.

Avneet Kaur

Higher exemption limit

A senior citizen enjoys a higher exemption limit compared to non-senior citizens. While the exemption limit for the financial year 2020-21 available to a non-senior citizen is Rs 2.50 lakh, a senior citizen may avail an exemption up to Rs 3 lakh. Thus, a senior citizen gets an additional benefit of Rs 50,000. A very senior citizen enjoys an even higher exemption limit of Rs 5 lakh. Exemption limit is the quantum of income up to which a person is not liable to pay tax.

Paper filing of Income Tax Return

The Income Tax allows very senior citizens filing ITR using form 1 or 4 to file their income tax return in paper mode. The e-filing option is also available.

Income tax deduction on interest on bank deposits

Section 80TTB of the IT Act allows tax benefits on interest earned from deposits with banks, post offices or co-operative banks. The deduction is allowed for a maximum interest income of up to Rs 50,000 earned by the senior citizen. Both the interest earned on saving deposits and fixed deposits are eligible for deduction under this provision. Also, under Section 194A of the IT Act, no tax is deducted at source (TDS) on interest payment of up to Rs 50,000 by the bank, post office or co-operative bank to a senior citizen. This limit is to be computed for every bank individually.

Tax benefits with respect to medical insurance and expenditure

According to Section 80D of the Income Act, senior citizens may avail a higher deduction of up to Rs 50,000 for payment of premium towards medical insurance policy. The limit is Rs 25,000 in case of non-senior citizens. Further Section 80DDB of the IT Act allows tax deduction on expenses incurred by an individual on himself or a dependent towards the treatment of specific diseases as stated in the act. The maximum deduction amount in case of a senior citizen is Rs 1 lakh (Rs 40,000 for non-senior citizen taxpayers.