Income Tax Benefits that Senior Citizen can Continue Enjoying in 2022

Additional tax breaks, on top of those already provided by general legislation, are available to individuals who have reached the age of retirement. These eligible individuals may benefit from increased income tax exemptions, larger deductions, and simplified preparation of their tax returns when certain conditions are met. Let’s take a look at the various income tax benefits that are available to people who are in their golden age.

Increased threshold for basic exemption

Tax rates are not adjusted for senior citizens; everyone pays the same amount. However, the standard income tax benefits that apply to people who are not seniors, seniors, and super-seniors are not the same. The maximum /income that can be exempted from taxation is Rs 3 lakh for seniors and Rs 5 lakh for super seniors. The cap is only Rs. 2.5 lakh for those individuals who do not qualify as seniors.

Citizens below 60	Citizens between 60 – 79	Citizens above 60	Tax rates
Below Rs. 2.5 Lakh	Below Rs. 3 Lakh	Below Rs. 5 Lakh	Nil
Rs. 2.5 Lakh to 5 Lakh	Rs. 3 Lakh to 5 Lakh	—-	5%
Rs. 5 Lakh to 10 Lakh	Rs. 5 Lakh to 10 Lakh	Rs. 5 Lakh to 10 Lakh	20%
Above Rs.10 Lakh	Above Rs.10 Lakh	Above Rs. 10 Lakh	30%

However, this will no longer be the case if they elect to switch to the new income tax benefits. Everyone, regardless of age, is subject to the same basic exemption level, Rs. 2.5 lakh.

The tax brackets under the new system are as follows:

Income slab for all individuals	Tax rates
Below Rs. 2.5 lakh	Nil
Rs. 2.5 lakh to 5 lakh	5%
Rs. 5 lakh to 7.5 lakh	10%
Rs. 7.5 lakh to 10 lakh	15%
Rs. 10 lakh to 12.5 lakh	20%
Rs. 12.5 lakh to 15 lakh	25%
Above 15 lakh	30%

Disregarding one’s income tax returns

Individuals 75 years old or older are excused from filling out an ITR. Those who get their interest and pension from the same financial institution qualify for income tax benefits. Those who receive their pension from a different institution are not eligible. It is required that the person in question have no other potential sources of financial assistance. However, before distributing the money, the bank must subtract the tax from the total amount. The senior citizen must provide the bank with a completed copy of Form No. 12BBA to receive the refund outlined in Section 87A of the Income Tax Act and the number of deductions outlined in Chapter VI A.

No tax withholding is withheld on interest income

Senior citizens may submit a statement to their tax withholding entities in Form No. 15H for tax withholding on income from post office deposits, public provident funds, provident fund withdrawals, LIC maturity profits, etc. For senior citizens who have paid all their taxes and have nothing left to claim, this eliminates the need to file a tax return or seek a refund. Seniors can make this declaration on Form No. 15H, even if their income exceeds the standard deduction amount.

Moreover, for those aged 60 years and over, the maximum interest tax deduction on deposits is Rs 50,000 (Section 194A). For those who are not seniors, the limit is Rs 10,000.

Up to Rs. 50,000 in interest may be written off

Under Section 80TTB of the Income Tax Act, seniors may deduct interest earned on savings and fixed deposits up to Rs 50,000. If your annual income is more than Rs 50,000, you’ll be subject to the lower, senior citizen-friendly tax rates. Interest earned on term or fixed deposits is not eligible for deduction under Section 80TTA for those who are not seniors.

Tax deduction under Section 80C

According to this provision, elderly citizens and super seniors are eligible to deduct up to Rs 1.5 lakhs from their yearly gross income for allowable investments and expenses. Common assets that qualify for 80C deduction protection include:

• Financial commitments to create an equity-linked savings scheme (ELSS) over 5 years.
• You may put money away in various ways, such as the National Savings Certificates (NSC), the Public Provident Fund (PPF), and the Life Insurance Policy (LIP).

Healthcare expenses and insurance premiums are tax deductible under Section 80D

According to Section 80D of the Indian Income Tax Act, individuals under the age of 60 years are eligible to receive a tax deduction for up to Rs 25,000 of the cost of their medical insurance premiums. Nevertheless, the reduction of Rs 50,000 is a significant income tax benefit for senior citizens. Under section 80D, senior citizens are eligible for an additional deduction for medical expenses.

Tax break increase for a certain illness

Under Section 80DDB of the Internal Revenue Code, taxpayers are allowed to deduct the expense of treatment for certain diseases. This section discusses the medical treatment of serious diseases and ailments, such as cancer, neurological abnormalities, etc. Deductions for medical expenses are possible up to Rs 1,00,000.

The money from a reverse mortgage doesn’t have to be paid in taxes

By permanently mortgaging their houses, elders may receive monthly payments via a reverse mortgage arrangement. A senior citizen retains all rights of ownership and possession. When the borrower dies, the lender will sell the property and use the proceeds to pay off the debt plus any accrued interest. The proceeds from the sale are distributed to the rightful heirs. A senior citizen who receives a lump-sum payment now or in instalments throughout their lifetime from this plan will not be subject to federal income tax on that amount.

Prepayment of taxes is not required

An individual must make an advance tax payment if they anticipate having a tax liability for the subsequent fiscal year that is more than Rs 10,000. If senior citizens have no revenue from a company, they do not have to make an advance tax payment. They are accountable for deducting and paying taxes on their earnings. This is another one of the income tax benefits.

Summing up

When paying taxes, seniors are considered to be 60 years or older but still younger than 80. Those who have reached the age of 80 and beyond are considered “super senior citizens”. These are some income tax benefits these seniors and super citizens may enjoy in their golden years. To learn more about their benefits, you may visit Piramal Finance, which will provide you with all the necessary information.