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Wednesday, 28 October 2020

What benefits apply for Senior Citizens under Income Tax in India

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Whether we like it or not, we all worry about the future and considerably make choices to save and invest money so that we can have a secure tomorrow. Consequently, a lot of what we do today help contribute to not only our growth but the country’s overall growth too.

However, don’t you think there should be some income tax benefits for seniors who’ve already given a lot in the younger days? Let’s get straight into it to talk about some of these benefits under Income Tax Benefits for Senior Citizens.

Who is considered a Senior Citizen in India??

Senior Citizen must be of the age of 60 years or above but less than 80 years at any time during the respective year

Very Senior Citizen must be of the age of 80 years or above at any time during the respective year.

    What are the Special Income Tax Benefits for Senior Citizens??

1.     Benefit of Higher Basic Exemption Limits:

We know that for ordinary individual taxpayers the basic limit for exemption, up to which he is not required to pay tax is presently Rs. 2,50,000 up to A.Y. 2021-22. However, for Senior Citizens, the basic exemption limit is fixed at a higher figure of Rs. 3,00,000. For Very Senior Citizens does not have to pay tax up to Rs. 5,00,000 of Annual total income.

Income Tax Rates for Senior and Very Senior Citizens are as under:


AY 2020-21 (FY 2019-20)

Rates of Taxation

 Total Income

Senior Citizen  

Very Senior Citizen

Up to Rs.3,00,000



Rs.3,00,000 to Rs.5,00,000



Rs.5,00,000 to Rs.10,00,000



More than Rs.10,00,000



 2.      Benefits under Medical Insurance

Deduction in respect of a health insurance premium paid by an individual and HUF is deductible up to Rs. 25,000 and additional deduction up to Rs.25,000 for the health insurance premium paid for parents or parents of the assessee is available.

Under the above circumstances, if an assessee is a Senior or Very Senior Citizen deduction will be available up to Rs.50,000. Please remember that for claiming this deduction the health insurance premium is paid by any mode other than cash.

Over and above any medical expenditure incurred on medical treatment of specified diseases.  To claim the amount of expenditure the assessee is required to obtain the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a hematologist, an immunologist, or such other specialist, as prescribed in the amended rule 11DD(2). The allowable amount is of Rs.1,00,000.

3.      Privilege on Interest Income

The senior citizens who are residents of India will have to pay no tax on their interest earned up to Rs.50,000 in a financial year. Applicable under section 80 TTB of Income Tax, this will take into account interest earned in the savings bank account, deposits in a bank, and/or deposits in post-office.

4.      Form No 15H for Non deduction of TDS

Section 194A of the Income Tax Act 1961 gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or post office or a cooperative bank to a senior citizen up to Rs. 50,000. Therefore limit is to be computed for every bank individually. The senior citizens will have to fill the form 15H.

 5.      No Advance Tax

While ordinary individuals have to pay an advance tax if their tax liability is Rs.10,000/- or more in a financial year, senior citizens are free from this burden unless they make income from business or profession. Those not owning a business only have to pay the Self-Assessment Tax. As per Section 207, a resident senior citizen not having any income from business or profession, is not liable to pay advance tax.

6.      Standard Deductions from Pension Income

Under Section 16, Senior citizens are allowed a standard deduction of ₹50,000 on account of their pension income. 

7.      Transfer of Capital assets under ‘Reverse Mortgage Scheme’

The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain (Nor under any other head of income). A senior citizen may reverse mortgage any of his accommodation to make monthly earnings. The ownership of the property remains with the senior citizen and they are given monthly payments for it. The amount paid in installments to the owner is exempted from Income Tax. 

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