9 ways to use credit card properly!

The older income tax regime allows senior citizens to avail themselves of additional tax benefits and rebates compared to younger taxpayers. However, the new income tax regime introduced in Budget 2020 does not classify any exclusive benefits basis the taxpayer’s age. But if you’re a senior citizen or on the verge of retirement and have chosen to continue with the older tax regime, there are certain tax benefits you should know about.

The primary thing to note is the taxable income slab as per your age. For senior citizens aged between 60 and 80 years, their income turns taxable at Rs 3 lakh and that of very senior citizens (80 years and above) starts at Rs 5 lakh. Meanwhile, it remains Rs 2.5 lakhs for all those below 60 years of age. But the elderly people enjoy not just the benefit of high-income tax slab but relaxations in advance tax are also applicable to them.

Advance tax and standard deductions

“Along with the higher income tax slab exemptions, senior citizens also enjoy relaxations in advance tax, health insurance premiums, saving bank, and fixed deposit interests. Citizens above 60 years with no business income are also not required to deposit advance tax and can dispose of their tax liability in one time while filing of the income tax return,” said Shailesh Kumar, partner, Nangia & Co LLP.

While senior citizens get a deduction up to Rs 50,000 (section 80TTB) from interest on deposits with the bank, no tax is deducted at source for them if the interest on bank deposits is within the same limit. However, the option to submit Form 15H for Nil tax deduction is also available in case such limit is exceeded.

“Taxpayers enjoy additional deductions on health insurance premium if they themselves or their parents are senior citizens i.e. maximum deduction for senior citizens on such premia is Rs 50,000 whereas in other cases it is restricted to Rs 25,000 only,” Kumar added.

Relaxation from tax filing

Apart from this, senior citizens also get higher tax benefits on expenses made on account of any medical treatment for specified diseases, etc. Similarly, section 80DDB also provides a higher threshold of deduction of Rs 1 lakh in case of senior citizens for medical treatment of specified diseases, he added.

“The Finance Act, 2021 announced further relaxation from furnishing of income tax return to a certain category of senior citizens who are above 75 years and have no income other than pension and saving bank interest from the same specified bank in which pension is received. Only a declaration is supposed to be submitted to the bank by the senior citizen and the bank shall make requisite tax deductions against which the senior citizen will not have to file any return of income,” Kumar explained.