Senior Citizen finds it difficult in decreasing interest rate and inflationary environment to survive with burden of Taxes.  There are various provisions provided under the income tax act so that the senior citizen gets benefit. This article provides details of such provisions

Q1.  ​What are the benefits available to a senior citizen and very senior citizen in respect of tax rates?

​​Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal tax payers. Exemption limit is the quantum of income up to which a person is not liable to pay tax. The exemption limit granted to senior citizen and very senior citizen for the financial year 2015-16 is as follows :

Senior citizen

Very senior citizen

A senior citizen is granted a higher exemption limitcompared to non-senior citizens. The exemption limit for the financial year 2015-16 available to a resident senior citizen is Rs. 3,00,000. In other words, a resident senior citizen is not liable to pay any tax up to income of Rs. 3,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal tax payers.

A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2015-16 available to a resident very senior citizen is Rs. 5,00,000. In other words, a resident very senior citizen is not liable to pay any tax up to income of Rs. 5,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000 in the form of higher exemption limit is available to a resident very senior citizen as compared to normal tax payers.

Q2.  ​At what age a person will qualify as a senior citizen and very senior citizen under the Income-tax Law?

​Before understanding the age criteria, it is very important to know that the tax benefits offered under the Income-tax Law to a senior citizen/very senior citizen are available only to resident senior citizen and resident very senior citizens. In other words, these benefits are not available to a non-residenteven though he may be of higher age. The age and other criteria to qualify as a senior citizen and very senior citizen under the Income-tax Law are as follows:

Criteria for senior citizen

Criteria for very senior citizen

Must be of the age of 60 years or above but less than 80 year at any time during the respective year.

Must be of the age of 80 years or above at any time during the respective year.

Must be resident

Must be resident

Illustration

Illustration

(1) Mr. Kumar (resident in India) attained the age of 60 years during the financial year 2015-16. Will he qualify as senior citizen under the Income-tax Law for the financial year 2015-16?

Yes, since Mr. Kumar is a resident and he attained the age of 60 years during the year 2015-16, he will be treated as senior citizen under the Income-tax Law for the financial year 2015-16.

(2) Mr. Kamal (non-resident) attained the age of 60 years during the financial year 2015-16. Will he qualify as senior citizen under the Income-tax Law for the financial year 2015-16?

Mr. Kamal is a non-resident, the benefits of senior citizen under the Income-tax Law are available to a resident only, and hence, Mr. Kamal will not be treated as senior citizen under the Income-tax Law for the financial year 2015-16.

(1) Mr. Raja (resident in India) attained the age of 80 years during the financial year 2015-16. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2015-16?

Yes, since Mr. Raja is a resident and he attained the age of 80 years during the year 2015-16, he will be treated as a very senior citizen under the Income-tax Law for the financial year 2015-16.

(2) Mr.Rajat (non-resident in India) attained the age of 80 years during the financial year 2015-16. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2015-16?

Mr.Rajat is a non-resident, the benefits of very senior citizen under the Income-tax Law are available to a resident only and, hence, Mr.Rajat will not be treated as very senior citizen under the Income-tax Law for the financial year 2015-16.​

Q3.  ​Is there any special benefit available under the Income-tax law to very high aged person, i.e., very senior citizens?

​​​Yes, the Income-tax Law very well takes care of very senior citizens of the nation by offering special tax benefits to high aged person (80 year or above).

Q4.  ​Is there any special benefit available under the Income-tax law to senior citizens?

​​​Yes, the Income-tax Law very well takes care of the senior citizens of the nation by offering them several tax benefits.In this part you can gain knowledge of various benefits offered by the Income-tax Law to senior citizens.

Q5.  ​Is a very senior citizen granted exemption from e-filing of income tax return?

​​From the assessment year 2015-16 onwards any taxpayer filing return of income in Form ITR 1/2/2A and having a refund claim in the return or having total income of more than Rs. 5,00,000 is required to furnish the return of income electronically with or without digital signature or by using electronic verification code. However, Income-tax Law grants relaxation from e-filing in above case to very senior citizen.

In other words, a very senior citizen filing his return of income in Form ITR 1/2/2A and having total income of more than Rs. 5,00,000 or having a refund claim can file his return of income in paper mode, i.e., for him e filing of ITR 1/2/2A (as the case may be) is not mandatory. However, he may go for e-filing if he wishes.

Q6.  ​Is a retired senior citizen granted exemption from payment of advance tax?

​​As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of "advance tax". However, section 208 gives relief from payment of advance tax to a retired senior citizen. As per section 208 a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

Q7.  ​What are the benefits available in respect of expenditure incurred on account of medical treatment of specified diseases on treatment of a senior citizen or a very senior citizen?

Section 80DDB of the Income-tax Law gives various provisions relating to tax benefits available on account of expenditure on medical treatment of specified diseases. Individual or Hindu Undivided Family (HUF) who is resident during previous year, and has paid any amount for the medical treatment of such disease or ailment, for himself or dependent in case of individual or any member of HUF in case of HUF. Rs 40,000/- deduction shall be allowed or amount actually paid, whichever is less. In case any of the above is a senior citizen (65 years or more), an additional deduction of Rs. 20,000 shall be allowed towards payment of the senior citizen. i.e. in case of senior citizens the above limit of 40,000 shall be upgraded to Rs.60000. Further in case of Super Senior Citizen (80 years or more), the limit is Rs 80,000/. “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

For the purposes of section the following shall be the eligible diseases or ailments :

(i)            Neurological Diseases where the disability level has been certified to be of 40% and above,—

                (a)          Dementia ;

                (b)          Dystonia MusculorumDeformans ;

                (c)           Motor Neuron Disease ;

                (d)          Ataxia ;

                (e)          Chorea ;

                (f)           Hemiballismus ;

                (g)          Aphasia ;

                (h)          ParkinsonsDisease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v)  Hematological disorders :

                (a)          Hemophilia ;

                (b)          Thalassaemia.

 

Q8.  ​What are the benefits available in respect of expenditure incurred on account of medical insurance premium/ medical expenditure to a senior citizen/very senior citizen and on account of?

​​​ Section 80D of the Income-tax Law gives various provisions relating to tax benefits available on account of payment of medical insurance premium and other related items.

As per section 80D, an individual or a HUF can claim deduction in respect of the following payments: 1) Medical insurance premium paid by assessee, being individual/HUF by any mode other than cash. 2) Any contribution made by assessee, being individual to Central Government Health Scheme or such other Scheme as may be notified by the Central Government. 3) Sum paid by assessee, being individual on account of preventive health check-up. Medical expenditure incurred by assessee, being individual/HUF on the health of a very senior citizen person provided that no amount has been paid to effect or to keep in force an insurance on the health of such person

 

In case of an individual, deduction is available in respect of medical insurance policy taken in his own name, or in the name his/her spouse, his/her parents and his/her dependent children. In case of HUF, the policy can be taken on the health of any member of such HUF. Deduction on account of medical expenditure shall be allowed only when it is incurred on the health of the aforementioned persons who are very senior citizens. Very senior citizen’ means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year

 

In case of an individual, amount of deduction cannot exceed:

a. Rs. 25,000, in aggregate, in respect of medical insurance premium or any payment made for preventive health check-up (*). [This deduction is available if payment is made for benefit of assessee, himself or his/her spouse or dependent children]

b. Rs. 25,000, in aggregate, in respect of medical insurance premium or any payment made for preventive health check-up (*). [This deduction is available if payment is made for benefit of parents of assessee.]

c. Rs 25,000 in aggregate in respect of contribution made to the Central Government Health Scheme or any scheme notified by the Central Government [This deduction is available if payment is made for benefit of assessee, himself, his/her spouse or dependent children] [As amended by Finance Act, 2015]

d. Rs 30,000 in aggregate in respect of medical expenditure incurred on the health of assessee, himself, his/her spouse or dependent children or parents. [This deduction is available if amount is paid for benefit of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.]

(*) total amount of deduction for the expenditure incurred on preventive health check-up of assessee, his family and parents could not exceed Rs. 5,000.

Note: In aforesaid clauses a, b and c additional deduction of Rs 5,000 is available when medical insurance is taken on the life of senior citizen.

 

Also read related article: How to Pay Zero Tax for Income up to Rs 10 Lakhs by CA Chirag Chauhan

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CA Chirag Chauhan

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