Income Tax Benefits for Senior Citizens

A person becomes senior citizen under Income Tax Act in any year after attaining the age of 60 even for one day. Once he attains 60 years, his status as senior citizen in that financial year, gives him some relief .These are listed below:

1. Higher Exemption Limit

From F.Y. 2011-12  Qualifying age for Senior Citizens has been reduced from 65 years to 60 years and from A.Y. 2015-16 exemption limit for Senior Citizens has been enhanced from Rs. 2,50,000 to Rs. 3,00,000.  A new category of Very Senior Citizens, 80 years and above, has been created who will be eligible for a higher exemption limit of Rs. 5,00,000. Senior citizen above the age of 80 years are entitled to higher exemption Limit of Rs. 5,00,000 from A.Y. 2012-13.

2. Reverse mortgage for senior citizens

Reverse mortgage’ – a concept introduced by Finance 2007 -provides that a senior citizen will be able to avail of monthly income streams by mortgaging a house owned by him. Reverse mortgage created under a scheme made and notified by the Central Government shall not be regarded as a transfer U/s. 2(47)

3. Tax benefits on medical insurance hiked

A senior citizen can avail of higher of higher deduction of Rs 20,000 u/s Section 80D and the same limit is been further increased to Rs. 30,000/- from A.Y. 2016-17.

4.  Tax benefit in respect of Expense on medical expenditure in respect of a very senior citizen

With effect from A.Y. 2016-17 Any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D. 

5. Higher Deduction u/s 80DDB for Senior Citizens and Super Senior Citizens

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Generally this deduction is available upto Rs 40,000 . However , if the patient is a senior citizen, then deduction of Rs 60,000 is allowable.

From A.Y. 2016-17 higher limit of deduction of upto eighty thousand rupees is allowable, for the expenditure incurred in respect of the medical treatment of a “very senior citizen”. A “very senior citizen” is proposed to be defined as an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.   

6. No Routine Income Tax Scrutiny of Senior Citizens  

Appreciating the concern of these taxpayers and with a view to mitigate their hardships, Central Board of Direct Taxes has reviewed its scrutiny selection procedure. In order to redress the grievance, it has been decided that during the financial year 2011-12, cases of senior citizens and small taxpayers, filing income-tax returns in ITR-1 and ITR-2 will be subjected to scrutiny only where the Income Tax department is in possession of credible information. Senior citizens for this purpose would be individual taxpayers who are 60 years of age or more.

7. Senior Citizens not having Business Income Exempt From Advance tax payment :- 

From Financial year 2012-13  resident senior citizen, not having any income chargeable under the head “Profits and gains of business or profession”, shall not be liable to pay advance tax and such senior citizen shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax.

8.  Senior citizens receive a higher interest (up to 50 bps) on a 5-year fixed deposit, which is eligible for deduction from the total income under Section 80C.

9.  Senior citizens can claim exemption on the tax deducted at source (TDS) on interest income earned on deposits. It can be done by submitting Form 15H under Section 197 of the IT Act.

Question :If the Age of the Assessee is not mentioned correctly on the PAN card can he still claim the benefit of Senior Citizen based on other Documents (Voter ID Card etc) ?

[2006] 152 TAXMAN 20 (CHD.) (MAG.) ITAT CHANDIGARH BENCH (SMC)

SHAKUNTLA DEVI V. INCOME-TAX OFFICER, WARD III, KHANNA

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Section 88B of the Income-tax Act, 1961 - Tax rebate - Senior citizen - Assessment year 2002-03 - Assessee filed her return of income for assessment year 2002-03 and claimed rebate of tax under section 88B by claiming to be a senior citizen above age of 65 years - Assessing Officer pointed out that in return filed and in PAN Card, date of birth of assessee had been shown as 1-1-1938 and, therefore, assessee had not attained age of 65 years as on 31-3-2002 and was not eligible for rebate under section 88B - Whether since assessee by way of affidavit had stated that her actual date of birth was 1-1-1935 and due to oversight it was mentioned as 1-1-1938 on PAN Card instead of 1-1-1935 and moreover claim of assessee was supported by Identity Card issued by Election Commission and also by certificate issued by SMO who certified that age of assessee in year 2003 was about 70 years, it could be said that age of assessee on 31-3-2002 was more than 65 years and assessee was entitled to rebate under section 88B - Held, yes