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A closer look at Tax for Senior Citizens

A closer look at Tax for Senior Citizens

The history of India can be originated from socially enhanced foundations where senior citizens are offered appreciation and love.

The government works to ensure the way of life and virtues remain flawless, and offer extraordinary taxation benefits to our elderly. The thought is to alleviate the elderly from financial strain especially at this stage of life.

If you’re elderly, or you as a senior citizen are arranging your assets, it is pivotal to think about the taxation reductions and benefits they can avail.

Budget announcements for senior citizens

Among a few key declarations made by Union Finance Minister Nirmala Sitharaman in the Union Budget announced on February 1st, 2021, senior residents over 75 years with just pension pay have now been excluded from filing the Income Tax returns.

To diminish cases of taxation badgering of senior citizens, Indian government has additionally reported lessening the time period for reopening of income tax evaluation cases from 6 years to 3 years. For resuming genuine tax, avoidance cases as long as 10 years, the public authority has placed in a financial restriction of cases including over Rs 50 lakh in a year.

Here are the main allowances, advantages, and taxation benefits for senior citizens which may bring about an ease in financial duties regarding seniors(aged above 59 upto 79) and super senior citizens(ages 80 and above).

1. Standard Deductions from Pension Income

Senior residents are permitted a standard deduction of ₹50,000 by virtue on their pension income.

2. No taxation under Reverse Mortgage Scheme

A senior resident may reverse mortgage their conveniences or accommodations to create monthly income. The ownership for the property remains in the hands of the senior and they are given regular scheduled installments in the form of income. The sum paid in installments to the senior citizen is excluded from any taxation.

3. Medical Insurance Advantages

Section 80D states that:

  • Senior residents are given an advantage over installments for medical care coverage expenses under ₹50,000 only.
  • For super seniors, the deduction over installments for clinical premium payment as genuine costs for treatments are permitted.

Additional Read:  5 Reasons to Buy Health Insurance if you don’t have one

4. Benefit Over Elementary Exemption

Every Indian citizen hailing from the non-business bracket can avail of some basic waivers when it comes to paying taxes.

Elementary exemption limit for seniors is set for under ₹3 lakh. Any amount above 3 lakh is set to be taxed as the senior citizens tax slabs as mentioned below.

Super seniors receive better preferred positions, with exemption set for under ₹5 lakh. Any amount higher than this follows the super senior citizens tax slabs as mentioned below.

Senior Citizens Tax Slabs

Upto ₹3 lakhsNA
Ranges from ₹3 lakhs to ₹5 lakhs5%
Ranges from ₹5 lakhs to ₹10 lakhs20%
Above ₹10 lakhs30%

Super Senior Citizens Tax Slabs

Upto ₹5 lakhsNA
Ranges from ₹5 lakhs to ₹10 lakhs20%
Above ₹10 lakhs30%

5. Interest Income Advantages

Seniors and super seniors who are residing in India are exempted from taxation on their premium procured under ₹50,000 per year.

Under section 80TTA, Income Tax, it includes revenue acquired in the saving funds ledger, bank deposits, and additionally in mailing stations and post offices.

Additional Read: How Can Wealth Management Help You Save on Tax?

6. Remittance for Treatment of Specific Ailments

Indian government provides a remittance to its residents to be exempted from paying taxes if the treatment expense falls under ₹40,000/ –

Section 80DDB of Income Tax states that senior and super senior residents get an exemption for treatments if the expenses for the treatment do not exceed ₹ 1 lakhs.

7. Exemption from Advance Tax

Advance Tax is a sum amount that has to be paid by all citizens of India to the government in advance, instead of paying them lump sum during the time of filing your income tax

While conventional citizens have to pay this advance tax provided their expense liability is more than ₹10,000 in a monetary year, senior residents are excused from this taxation, unless they are making money from businesses.

Tax slabs and taxation benefits for senior citizens and super senior citizens as mentioned above bring about an ease of living and medicare for our elderly, thus improving their living conditions and lifestyle.

To get professional assistance for your wealth management and tax-saving needs, get in touch with Tata Capital Wealth today.

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