Senior citizens get additional tax benefits, such as higher income tax exemptions, deductions, etc., besides help in submitting tax returns. Let's examine them in detail.
Higher Basic Exemption Limit
Archit Gupta, founder and CEO of Clear, a tax firm, says the basic exemption limit is different for non-senior citizens, senior citizens and super-senior citizens. For senior citizens and super senior citizens, the basic exemption limit for income is Rs 3 lakh and Rs 5 lakh, respectively. However, for non-senior citizens, the limit is Rs 2.5 lakh.
Non-Filing Of Income Tax Returns (ITR)
People who are 75 years or older are not required to file ITR. Those drawing pension from the same bank where they earn interest on their accounts are exempted. They shouldn't have any other source of money to avail of this benefit.
"However, the tax must be deducted by the bank paying such income. The senior citizen should submit Form No. 12BBA to the bank declaring the amount of deductions under Chapter VI A and the rebate available under Section 87A of the Income Tax Act," says Gupta.
Tax Deducted at Source (TDS)
To avail of tax benefits from post office deposits, public provident funds, provident fund withdrawals, LIC maturity profits, etc., senior citizens can submit a declaration in Form No. 15H for tax rebate. It helps senior citizens to avoid the hassles of filing ITR to claim refunds for TDS deductions, says Gupta.
Additionally, Gupta highlighted that Form No. 15H can be submitted by senior citizens even if the income earned is more than the basic tax exemption limit.
He said: “The limit of deducting tax on interest (Section 194A) on deposits is Rs 50,000 for senior citizens. For non-senior citizens, the limit is Rs 10,000."
Section 80TTB
As per Section 80TTB, interest received by a senior citizen on deposits made with a banking company or post office, etc., is taxable up to Rs 50,000.
The rising inflation, including medical expenses, has caused significant problems for the masses, especially senior citizens who have limited income or are dependent on others.
"There is a need to make more funds available to senior citizens, either by increasing the interest rate or by reducing the tax burden,” says Saket Dalmia, President of PHD Chamber of Commerce and Industry.
In his pre-budget recommendations on direct tax, he suggested deductions up to Rs.1.5 lakh for interest earned by senior citizens. "Additional interest should be given to senior citizens, which at present is about 0.5 per cent on bank deposits," he adds.
