Individuals are always looking out for investment options that will provide them with a steady source of income during their retirement age. The government has come up with many incentives over the years to provide tax benefits to senior citizens. Senior and super senior citizens usually have income from pension, fixed deposits, interest on savings, rental income, etc. This article will help you understand the various aspects related to relief in taxation that a senior and super-senior citizen can avail.
Tax Benefits available to Senior and Super Senior citizens
Individuals between the age group of 60 and 80 are considered senior citizens and individuals who are above the age of 80 are termed as super senior citizens. The following are various benefits available to them:
Standard Deduction
The standard deduction of INR 50,000 is available for senior citizens having pension income. Hence, if the pension income is mentioned under the head Salary Income, then the standard deduction can be claimed while filing an ITR.
Exemption on Interest Income
The taxpayer having an interest income up to INR 50,000 from the following deposits can claim a deduction u/s 80TTB:
- Bank Deposits i.e., savings account interest, fixed deposits, recurring deposits
- Any interest earned on deposits with Co-operative Society engaged in banking
- Interest earned from Post Office Deposits i.e., Saving Account Interest, NSC, Senior Citizens Savings Scheme Accounts, Time Deposits, 5-year recurring deposits, and monthly income schemes
If this interest income is more than INR 50,000 then TDS is deducted. However, senior citizens can submit Form 15H to claim relief from TDS deduction on income generated from such deposits. Further, this deduction is only available under the Old Tax Regime.
Exemption on Health Coverage and Medical Expenditure
An exemption u/s 80D is available up to INR 50,000 on the health insurance premium amount to increase the scope of receiving good health coverage. Additionally, u/s 80DDB deduction of INR 1,00,000 is also available on the expenses incurred on the treatment of a specific disease. These two deductions are available only under the old tax regime.
No Advance Tax
An individual has to pay advance tax when the tax liability is more than INR 10,000. However, senior and super senior citizens do not have to pay advance tax if they are not earning income from business or profession. They only have to pay Self-Assessment Tax after calculating the final tax liability of the financial year.
Exemption from ITR filing
If senior citizens fulfill the following conditions then they are not required to file ITR:
- Their age is more than 75 years.
- Their incomes consist only of pension income and interest income. Here, interest income can be from any bank account with the same bank in which they are receiving a pension.
- They have submitted the declaration with the bank for the same.
- The bank has deducted the TDS under section 194P.
Offline filing of ITR
The Income Tax Department has provided an exception for Super Senior Citizens (age more than 80 years) to file their ITR offline. However, this option is available only for filing the ITR-1 and ITR-4.
Exemption on Reverse Mortgage
A senior citizen can also avail the tax benefits under the reverse mortgage scheme. Under this scheme, the property of the individual is mortgaged, and in return, the citizen receives EMI payments which can help them to make monthly earnings. This amount is exempt from taxation and the ownership of the property will also remain with the senior citizen till they reside in it.
Income Tax Slab Rates under Old Regime
For Senior Citizens
| Income (INR) | Tax Rate | Health & Education Cess |
| up to 3,00,000 | Nil | Nil |
| 3,00,001 to 5,00,000 | 5% | 4% |
| 5,00,001 to 10,00,000 | 20% | 4% |
| more than 10,00,000 | 30% | 4% |
For Super Senior Citizens
| Income (INR) | Tax Rate | Health & Education Cess |
| up to 5,00,000 | Nil | Nil |
| 5,00,001 to 10,00,000 | 20% | 4% |
| more than 10,00,000 | 30% | 4% |
Surcharge for Senior and Super Citizens
| Total Income (INR) | Rate |
| > 50 Lakhs | 10% |
| > 1 Crore | 15% |
| > 2 Crore | 25% |
| > 5 Crore | 37% |
Income Tax Slab Rates under New Regime
Under the new tax regime, the health and education cess as well as surcharge rates will remain the same. The only changes are for income slabs and tax rates.
| Income (INR) | Tax rate |
| up to 2,50,000 | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 7,50,000 | 10% |
| 7,50,001 to 10,00,000 | 15% |
| 10,00,001 to 12,50,000 | 20% |
| 12,50,001 to 15,00,000 | 25% |
| more than 15,00,000 | 30% |
FAQs
Yes, super senior citizens i.e. individuals aged more than 80 years are allowed to file their income tax offline.
No, if their income only consists of pension income and interest income from the same bank then they are not liable to file ITR.
Senior citizens can claim the benefit of a standard deduction of INR 50,000 on their pension income reflected under the head salary income.
Hey @sushil_verma
There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.
For eg,
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!
Hey @shindeonkar95
In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.
However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.
Hope, it helps!
Hello,
Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?
There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?
I couldn’t find anything on this. Any help is appreciated.
Hello @Veejayy,
Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.
Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.
These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!
Also, interest earned on these bonds will be taxable.
Hope this helps!
Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total
Hey @Sheirsh_Saxena, yes, the investment amount needs to be added under 80C.