Those who’re 60 years or above of age, for all taxation and funding associated issues, they’re known as senior residents. There are a number of tax advantages obtainable to senior residents and as well as there are a number of funding choices which are both solely obtainable to them or include larger rates of interest.
As a senior citizen, the revenue is essentially within the type of pension however nonetheless lots of them could possibly be incomes a wage or consultancy revenue as effectively. When it involves investing, a senior citizen deploys retirement corpus such that there’s a common circulation of revenue to fulfill family bills. Further, taxation additionally must be stored under consideration in order to maintain the tax legal responsibility at bay.
Here are 10 funding and taxation associated advantages which are solely obtainable to senior residents.
1. Income tax Exemption Limits
The revenue tax exemption restrict differs amongst resident senior residents and never for NRIs. For those that are between 60 and years, revenue as much as Rs 3 lakh is exempted from revenue tax. They wouldn’t have to pay any tax on revenue as much as Rupees three lakh because the revenue shall be tax-free until that quantity. Under revenue tax guidelines, these senior residents who’re aged over 80 years are exempted to pay tax for revenue as much as Rs 5 lakh.
2. ITR Filing offline mode
From Assessment yr 2019-20 onwards, a really senior citizen submitting his return of revenue in Form ITR 1/ ITR 4 can file his return of revenue in paper mode, i.e., for him e submitting of ITR 1/ ITR 4 just isn’t necessary. However, he could go for e-filing if he needs.
3. ITR Filing Exemption
Section 194P of the Income Tax Act, 1961 gives circumstances for exempting Senior Citizens from submitting revenue tax returns aged 75 years and above. Conditions for exemption:
Senior Citizen needs to be of age 75 years or above
Senior Citizen needs to be ‘Resident’ within the earlier yr
Senior Citizen has pension revenue and curiosity revenue solely and curiosity revenue accrued / earned from the identical specified financial institution by which he’s receiving his pension.
New Section 194P is relevant from 1st April 2021
4. Advance tax cost
As per part 208, each particular person whose estimated tax legal responsibility for the yr is Rs. 10,000 or extra, shall pay his tax upfront, within the type of “advance tax”. However, part 207 offers reduction from cost of advance tax to a resident senior citizen.
As per part 207 a resident senior citizen (i.e., a person of the age of 60 years or above throughout the related monetary yr) not having any revenue from enterprise or occupation, just isn’t liable to pay advance tax.
5. Interest revenue deductible
Section 80TTB of the Income Tax legislation offers provisions regarding tax advantages obtainable on account of curiosity revenue from deposits with banks or put up workplace or co-operative banks of an quantity upto Rs. 50,000 earned by the senior citizen (i.e., a person of the age of 60 years or above). Interest earned on saving deposits and stuck deposit, each shall be eligible for deduction underneath this provision.
6. Interest revenue exemption as much as Rs 50,000
As a senior citizen if you’re incomes curiosity revenue as much as Rs. 50,000 on deposits in financial institution, post-office or co-operative financial institution, there won’t be any tax deducted at supply.
7. Exemption from TDS
As a senior citizen, if the entire revenue in a monetary yr is throughout the exemption restrict, Form 15H (Form 15G is for non-senior residents) could also be submitted by the depositor to the financial institution for not deducting TDS. Remember, if the deposits are for greater than a yr, one has to submit these varieties yearly ideally in April.
8. Medical insurance coverage premium
For senior residents, there’s a larger tax profit on medical health insurance premium cost. On the premium in direction of self, partner, kids and fogeys, the utmost deduction that may be availed is capped at Rs 50,000 a yr, offered the person’s age is above 60. Otherwise, the deduction is allowed as much as Rs 25,000 if the age is under 60. If the person is above age 60 and in addition pays a premium for his or her dad and mom, the entire deduction that may be availed is Rs 1 lakh.
Further Section 80DDB of the Income Tax Act permits tax deduction on bills incurred by a person on himself or a dependent in direction of the therapy of particular illnesses. The most deduction quantity in case of a senior citizen is Rs 1 lakh (Rs 40,000 for Non-Senior Citizen taxpayers).
9. Extra on financial institution FDs
Bank FDs provided to senior residents who’re 60 and above include further curiosity . Most banks provide 0.5 per cent additional on the rack price of the period chosen by them. The larger price can also be for any tax-saving deposit opened within the financial institution. At the time of preliminary deposit, proof of age is required to be submitted to the financial institution.
In addition, many banks had launched particular FD plans for senior residents for the tenure of 5 years and extra. On investments made by senior residents in such schemes, an extra rate of interest was relevant along with the additional that they had been already entitled to.
10. Senior Citizens’ Saving Scheme
Probably the primary selection of most retirees, Senior Citizens’ Saving Scheme (SCSS) is a must have in most retirees’ funding portfolio. As the title suggests this scheme is on the market solely to senior residents or early retirees. SCSS will be availed from a put up workplace or a financial institution by anybody over the age of 60 years. SCSS has a five-year tenure, however it may be prolonged for 3 years after the scheme matures. The higher funding restrict is Rs 15 lakh and one could open a couple of account. The curiosity is payable quarterly and totally taxable.
Source: www.financialexpress.com”