The term “senior citizen” is defined by legislation as a citizen between the ages of 60 and 80 on the penultimate day of the preceding financial year.
- IT Returns Must Be Filed
- What are the Sources Of Revenue for the Senior Citizens?
- Senior Citizens Income Tax Brackets
- What Tax Exemptions Do Senior Citizens Have From Income Tax Returns?
- What Other Economic Privileges Do Senior Citizens Have In Terms Of Income Tax?
IT Returns Must Be Filed
In case a senior citizen or super senior citizen makes even the slightest amount of money through the budget year, they must still report income tax. Regardless of whether the income is not eligible for taxation, a tax return must be essentially filed to receive a tax deduction or provide official documentation of revenue generated during a budget year.
Senior citizens must fully implement the following income tax forms depending on what type of their revenue to file a tax return:
- ITR 1 should be submitted when the overall income is up to Rs 50 lakhs from wage, one house estate, other alternative sources, or farming produce up to Rs 5,000.
- ITR 2 should be submitted if the total income exceeds Rs 50 lakhs or if the earnings from two residential properties, capital gains, or agricultural productivity surpasses Rs 5,000.
- In the case of annual income from a business or profession, the taxpayer must complete ITR 3.
- ITR 4 extends to presumptive income.
It is mandatory for residents to submit their returns online. However, submitting the form online is not generally required for super senior citizens. They can register their ITR 1 (Sahaj) and ITR 4 (Sugam) either online or in person.
Individuals over the age of 80 as that of at the end of the preceding financial period are specifically referred to as super senior citizens.
What are the Sources Of Revenue for the Senior Citizens?
Senior citizens frequently earn their revenue from the below sources:
- retirement plans.
- Savings account returns or fixed deposit programs
- Rental revenue from the tenancy of a house.
- Capital Gains are a fundamental consideration.
- Schemes for senior citizens to focus on saving money.
- various projects involving reverse mortgages
- Post office deposit programs that also pay the interest
- And there are plenty more.
Senior Citizens Income Tax Brackets
- Both Income tax and the Health and Education Cess are not chargeable to earnings up to INR 3 lakh.
- Whenever the income is somewhere between INR 3 lakh and INR 5 lakh, the tax rate is 5%, and the Health and Education Cess is 4% of the income tax.
- When the income is within INR 5 lakh and INR 10 lakh, the tax rate is 20%, and the Health and Education Cess is 4% of the income tax.
- When income surpasses INR 10 lakh, income tax is collected at a rate of 30%, and the Health and Education Cess is charged at a rate of 4% of income tax.
Whether we prefer it to or not, we all care about the consequences and make considerable investment decisions to save and spend funds in order to have a safe and secure future.
Individuals are frequently on the search for investment decisions that will actually offer them a reasonably reliable and consistent source of income during their future post-retirement period.
The majority of senior citizens in India continue to endure financial hardships in old age since the overwhelming bulk of them have been unable to make a decent living. If they have any, their funds are insufficient to meet their day-to-day needs, specifically medical costs.
The Income Tax Act of India gives several incentives to senior citizens in order to significantly reduce their problems and issues and help to alleviate their stress and tension during this point in life.
What Tax Exemptions Do Senior Citizens Have From Income Tax Returns?
The standard exemption ceiling for regular individual taxpayers, up to which they are not actually needed to pay any income tax, is typically priced at Rs. 2.50 lakhs for the current financial year 2020-21.
The baseline exemption amount for Senior Citizens, on the other hand, is set at Rs. Three lakhs, i.e., Rs 50,000 more than usual taxpayers.
What Other Economic Privileges Do Senior Citizens Have In Terms Of Income Tax?
Here are some of the tax breaks and incentives that may help senior citizens with their financial obligations.
Health Insurance Tax Benefits
Section 80 D provides a bonus to senior citizens in exchange for paying their health insurance premiums.
Health insurance payments paid for senior people, or super senior citizens are eligible as a deduction under this provision up to a threshold of INR 50,000.
Furthermore, a deduction of INR 1,000,000 is actually conceivable under section 80DDB for expenditures spent in the medical treatment of a certain ailment. These two deductions have only been legally allowed under the previous tax structure.
The following conditions and related disorders are currently listed in Income Tax Rule 11DD and are allowed for deduction under Section 80DDB:
- Dementia, Dystonia Musculorum Deformans, Chorea, Motor Neuron Disease, Ataxia, Aphasia, Parkinson’s Disease, and Hemiballismus are examples of neurological diseases that have been verified by a specialist neurologist and where the severity of impairment has been confirmed to be 40% or above.
- Cancer that is malignant.
- Acquired Immunodeficiency Syndrome or AIDS
- Kidney failure is chronic.
- Hematological illnesses such as hemophilia and thalassemia
Interest Income Advantage
Senior persons who are Indian residents would not have to pay income tax on interest earned up to Rs.50,000/- in a budgetary year.
This is due to the changes in the Finance Act of 2018.
This would include revenue from savings accounts, fixed deposit programs, and post office deposit schemes. It also incorporates any profits made on deposits with a Co-operative Society engaged in banking, as defined under section 80 TTA of the Income Tax Act.
TDS is automatically deducted if the interest income surpasses INR 50,000. Citizens above the age of 60, on the other contrary, can file Form 15H to make the claim of exemption from TDS deduction on cash generated by such investments.
There is no Obligation to Pay Advance Tax
The term “advance tax” specifically refers to a sum of money paid in advance to the Indian government that all people are obligated to pay.
Regular citizens must submit an advance tax if their tax burden is Rs.10,000/- or more in a current budget year, whereas senior citizens are entirely exempt from this legal obligation provided they make a decent living through a business or occupation.
They must only actually pay Self-Assessment Tax after evaluating their overall tax burden for the budgetary year.
There is no Taxation Applied Under the Reverse Mortgage Scheme
A senior citizen can indeed reverse mortgage any of his resources to generate monthly revenue. The senior individual holds possession of the property and enjoys monthly compensation for it. The total sum paid directly to the owner in installments is completely independent of Income Tax.
Reimbursement According to Section 80CCD (1B)
Investments in the National Pension Scheme are authorized as a reduction under this provision, subject to a limit of INR 50,000. This tax deduction is in addition to the amount reduction legally permitted under Sections 80C and 80CCC.
An NPS account can be established when you’re under the age of 65.
Exemption under Section 80G
If senior citizens or super senior citizens contribute to specific humanitarian causes and organizations, they can request a tax exemption for their financial contribution. Tax breaks are permitted by law at either 50% or 100% of the total amount paid, depending, of course, on the charity.
Exemption in compliance with Section 80C
This provision authorizes senior citizens and super senior citizens to exclude up to Rs 1.5 lakhs from their overall total revenue for approved investment and expenditure schemes.
This clause comprises the following investment schemes:
- Fixed deposits plan to extend for five years
- Contributing in an Equity-Linked Savings Plan (ELSS).
- Active participation in the Public Provident Fund (PPF).
- Paying of life insurance premiums (LIP).
- Contributing to a Senior Citizen Savings Plan (SCSS).
- National Savings Certificates and schemes alike