There are relaxations provided in the Income Tax Act for senior citizens. Section 80 TTB was introduced in Budget 2018. This and other sections take care of old people with health as their priority. Money is needed to keep them in a good condition both physically and mentally.
Who can claim deductions under this section?
Any resident senior citizen aged 60 years and above at any time during the fiscal year can claim a specified amount as a deduction from gross total income for that particular year.
What is deductible?
A deduction of lower than Rs. 50,000 or any amount from a specified income is allowed from the gross total income. Specified income means, interest on bank savings or fixed deposits, interest on post office deposits, interest on deposits held in a co-operative society engaged in the business of banking including a co-operative land mortgage bank or a co-operative land development bank.
An aggregate of the above interests is allowed as a deduction. However, if the specified deposits are held by or on behalf of a partnership firm, an association of persons (AOP), or a body of individuals (BOI) the deduction is not available for being any such partner of a firm or member of such an AOP or BOI. Also note that deductions under Section 80TTA too shall not be applicable.
Section 80 TTA allows a deduction up to Rs. 10,000 and that too only on a savings account held in a bank, co-operative bank, or a post office to individuals as well as HUFs. It is applicable even to non-senior citizens.
How to claim the deduction?
While filing return of income the deduction under this section can be claimed. Include the income in your total income and then deduct the amount of claim.
Other deductions:
Senior citizens do not have to pay advance tax for their income from salary, rent and interest earned.
Retired senior citizens are allowed to claim standard deduction of an amount up to Rs. 50,000 from their pension income.
Health is very important when an individual grows old. Taking this fact into account, senior citizens get a deduction of an amount up to Rs. 50,000 under section 80D on premium paid for health insurance. Rs. 5000 can be claimed towards annual health checkup while opting for a valid insurance plan. This deduction is restricted to Rs. 25,000 for people below the age of 60. In the case of super senior citizens who are above the age of 80, section 80D allows actual expense incurred on treatment.
Under section 80DDB senior and super senior citizens can claim a deduction of Ra. 1,00,000 for medical treatment of specified ailments.
For the senior citizens the government has set up basic exemption limit of Rs. 3 lakhs. A senior citizen pays only 5% tax for the next Rs.3-5 lakh slab. Super senior citizens however get a higher advantage, and they get a waiver up to Rs. 5,00,000 in one financial year. Ordinary citizens get an exemption only up to Rs. 2,50,000. Rebate of lower of Rs.12,500 or actual tax is also available under section 87A for senior citizens whose total income does not exceed Rs. 5,00,000. NRIs cannot claim rebate u/s 87A.
There are online tax calculations made available for senior citizens by the Income Tax department. While calculating tax for senior citizens retirement benefits and gratuity must be excluded. Senior citizens can file ITR through ITR Sahaj-1 form or ITR Sugam-4 form whichever preferred either manually or digitally. Senior citizens also enjoy exemption from TDS on interest earned.
ITR form 1 of Income Tax is for senior citizens whose income includes income from house property and excludes bringing forward the losses of previous years. It also includes income from other sources excluding income earned from lottery wins or horse race. ITR 2 includes all capital gains and the income earned by the spouse or other member whose earnings are combined with them. Basically, both these returns are meant for citizens earning their income from salary or pension.
A senior citizen may reverse mortgage any of his accommodation to earn monthly income. The ownership remains with them, and they are given monthly payments for it. This amount received by them as an owner is exempted from tax.
Moreover, senior citizens can claim a deduction under section 80C up to Rs. 1,50,000.
Senior citizen income limit has been increased to Rs. 3 lakhs under the old regime. Under the new tax regime, the limit is Rs. 2.5 lakh.
Section 194P allows exemption from filing of return of income for senior citizens above the age of 75 subject to conditions.
Senior citizens can go the portal and fill the details stepwise like assessment year for which they want to calculate their income tax, residential status, type of taxpayer etc. Then under different heads of income fill the amount of income. Avail the standard deductions. The next step is to calculate education cess as per slab of income tax, surcharge if any and arrive at the total tax liability. Fill in the due date of submission of ITR, completion of assessment for ITR and TDS or TCS if applicable. By clicking on the calculate button, you can figure out the approximate tax payable.
Bhoi Smrutirekha Dharanidhar