List of income tax benefits available to senior citizens (60 to 80 years) and very senior citizens (above 80 years):
- Tax exemption limit: Senior citizens and very senior citizens are granted a higher exemption limit compared to regular taxpayers or non-senior citizen taxpayers. The exemption limit for a senior citizen is Rs 3 lakh against the 2.5 lakhs for others. Very senior citizens are granted a higher exemption limit of Rs 5 lakh.
- Advance tax exemption: 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 207 gives relief from payment of advance tax to a resident senior citizen. As per section 207 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.
- Online ITR filing not mandatory: From Assessment year 2019-20 onwards, a very senior citizen filing his return of income in Form ITR 1/4 can file his return of income in paper mode, i.e., for him, e filing of ITR 1/4 (as the case may be) is not mandatory. However, he may go for e-filing if he wishes.
- Standard Deductions from Pension Income: Senior citizens are allowed a standard deduction of Rs 50,000 on account of their pension income.
- No tax under the Reverse Mortgage Scheme: 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 instalments to the owner is exempted from Income Tax.
- Tax Deduction benefits:
- Privilege on Interest Income:
Section 80TTB of the Income Tax law gives provisions relating to tax benefits available on account of interest income from deposits with banks or post office or co-operative banks of an amount up to Rs. 50,000 earned by the senior citizen (i.e., an individual of the age of 60 years or above). Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this provision.
Section 194A of the Income Tax law gives corresponding provisions that no tax shall be deducted at source from payment of interest by bank or ppost-office or a co-operative bank to a senior citizen up to Rs. 50,000. Therefor limit is to be computed for every bank individually.
- Payment of insurance premium (80D): As per Income Tax rules, medical insurance premium paid up to Rs 50,000 in a year by a senior citizen is allowed to be claimed as a deduction under Section 80D of the I-T Act. If the senior citizen is paying medical insurance premiums for their parents who are also senior citizens, they can claim an additional deduction of up to Rs 50,000 meaning they are eligible for a deduction of up to Rs 1 lakh.
- Medical treatment (80DDB): As per section 80DDB of the Income Tax Act, a senior citizen taxpayer can claim a tax deduction of up to Rs 1 lakh for expenditure incurred on medical treatment of specified diseases.
Source : https://www.incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs%20for%20Senior%20Citizens