Income Tax Saving: Tax filing is mandatory for every person who comes under the income tax. But if the taxpayer wants to reduce the tax burden on himself through various financial options. Its provision is under the Income Tax Act, 1961. In order to provide relief to senior citizens i.e. elderly people in meeting their needs, treatment expenses, etc., the Income Tax Department has kept the tax exemption limit slightly higher for them.
Firstly, in the traditional income tax slab, senior citizens have some extra relief from tax. Which is like this…
Although the new optional income tax slabs announced in Budget 2020 are the same for both the common people and senior citizens…
|Annual income||Tax rate|
|0 to 2.5 lakhs||0%|
|2.5 lakh to 5 lakh rupees||5%|
|Rs 5 lakh to Rs 7.50 lakh||10%|
|7.50 Lakh to Rs 10 Lakh||15%|
|10 lakhs to 12.50 lakhs||20%|
|12.50 Lakh to Rs 15 Lakh||25%|
|Above Rs.15 lakh||30%|
Benefit in case of tax on interest income
Under Section 80TTA of the Income Tax Act, interest income up to Rs 10,000 per annum is tax free for a person below 60 years of age or from a savings account of a bank / co-operative society / post office for HUF. At the same time, TDS is deducted on interest coming from bank FD. But if the annual interest income from bank FD is within the limit of 40000 rupees then TDS is exempt. TDS is not applicable even if there is an interest income up to Rs 40,000 in a year from RD. This rule came into effect from April 2019.
In the case of people above 60 years of age, any deposit made in savings accounts, FD / TD, post office schemes, co-operative banks, interest earned up to Rs 50000 in a financial year is tax free. This is under Section 80TTB of the Income Tax Act. In case of RD also, interest income up to Rs 50000 is tax free for senior citizens.
More benefit on post office savings account
Under Section 10 (15) of the Income Tax Act, a single account holder can claim an additional deduction of up to Rs 3500 on the annual interest income from the savings account in the post office. On the other hand, if the account is in the joint then additional deduction up to Rs 7000 can be claimed. This additional deduction is beyond the limit of 10000/50000 rupees.
In the case of senior citizens, it can be understood that on having a savings account in the post office, the annual interest income of up to Rs 53500 on their single account and Rs 57000 on the joint account will be tax free.
At health insurance premium
Individuals or HUFs can claim a tax deduction up to a maximum of Rs 25 thousand on the premium paid for medical insurance of their, spouse and dependent children under section 80D in addition to the tax deduction received under section 80C of the Income Tax Act. But if the parents are senior citizens, deduction can be claimed on the amount up to Rs 50 thousand.
Above this limit, if a taxpayer under 60 years is incurring medical insurance premium and / or medical expenses for parents below 60 years, then he will get an additional tax deduction of Rs 25,000. On the other hand, if the parents are more than 60 years of age, then they can also be claimed for additional deduction of Rs 50,000 on payment of insurance premium. In this case, the rebate will be available on the payment of up to 75000 rupees in total.
At the same time, a person who is in the senior citizen category, who is more than 60 years of age, can claim an additional tax deduction of Rs 50 thousand on the medical insurance premium and / or medical expenses of his parents. That is, if a taxpayer and his or her parents are both 60 years or more, then under this section, a tax exemption of up to a maximum of Rs 1 lakh can be availed through insurance premium. Apart from this, an individual taxpayer can also claim Rs 5000 for the expenses incurred on preventive health check-up under section 80D but it will be within the above spending limit.
In case of treatment of serious diseases
Under Section 80DDB of the Salaried Employee Income Tax Act, in case of selective diseases, you can claim a maximum tax deduction of Rs. 40,000 on the treatment of a member of your own or dependent family. On the other hand, for a senior citizen, the expenditure on treatment of selected serious diseases like cancer, motor neuron diseases, AIDS, etc., is tax free up to Rs 1 lakh within a financial year.