As you approach your age of retirement, which could be either 60 or 62 depending on where you work, you might focus more on life post-retirement. Retirement planning is something that helps you in managing your sources of income for retirement. As you would no longer be employed, your main concern would be income. However, one thing that should also be part of your retirement planning are the tax benefits that you can enjoy as a senior citizen. What benefits do you get as a senior citizen? Keep reading to know more.
What are the tax benefits for senior citizens?
The following are the benefits you can enjoy as a senior citizen:
- Under Section 80D
If you own medical insurance, there are different tax deductions that you can enjoy on the premium payments, especially as a senior citizen. Under section 80D of the income tax act, senior citizens are offered a benefit on payment of health insurance premiums up to Rs. 50,000. If your child has purchased the policy for you, the tax deduction will be applied on that policy as well. If you are a senior citizen, under section 80D, deductions on payment of premium and the actual expenses incurred on treatment are allowed. You can use the income tax calculator to get an estimate for this.
If there is a disabled person who is dependent on you for the payment of their medical treatment, you can avail tax deduction on payments of up to Rs. 75000, under Section 80DD. This deduction extends up to Rs. 1.25 Lakhs if the person being treated is disabled by 80% or more, i.e., severely disabled.
- Under Section 80C
If you are a senior citizen who has paid premium for their life insurance, or invested money in a PF, national savings certificate or has paid tuition fees of a dependent child, you can enjoy a tax deduction of up to Rs. 1,50,000 Lakhs under section 80C of the Income tax act. Under Section 80CCC, this deduction applies on the payment towards any annuity plan. Under Section 80CCD (1), if you are paying towards the pension scheme, you can enjoy the benefit of this deduction as well.
1.Under Section 80TTB
As a senior citizen, if you have deposited your money in an account and are receiving interest on it, interest earned up to Rs. 50,000 is eligible for tax deduction under Section 80TTB. This deduction can be availed on deposits made in savings accounts, fixed deposits or in the post office.
2.Under Section 80U
If you are a senior citizen who is suffering from disability, you can claim deduction on your tax payments. You get a deduction of Rs. 75,000 for being disabled below 80%. If you are disabled by 80% or more, you can claim a deduction of up to Rs. 1.25 Lakhs under Section 80U.
What other tax benefits can a senior citizen avail?
- Under Section 207 of the income tax act, if you are senior citizen, you are not required to pay advance tax on income that is not earned from any business or profession. However, you are required to pay self-assessment tax on the income you do earn.
- If you have mortgaged your house for income purposes, the payments that you receive from mortgaging your property are tax exempted.
- If you are a senior citizen above the age of 75, you are exempted from filing ITR. If you are receiving interest and pension in the same bank account, you can enjoy this exemption. This exemption can only be availed if you do not have any other sources of income.
What is the tax exemption limit for senior citizens?
As per the old tax regime, there were 2 classifications of senior citizens: those between 60-79, and those of 80 and above, who are termed as super senior citizens. In the old tax regime, the basic exemption limit on income for senior and super senior citizens was on the income of Rs. 3-5 Lakhs. However, under the new tax regime, this limit has been bought down to Rs. 2.5 Lakhs, which is common for all ages.
Conclusion
These are some of the tax benefits that you can avail as a senior citizen. To get more information related to this and other things such as income tax slab, you can get in touch with your tax advisor.
