World Senior Citizen’s Day 2022: From tax rebates to medical insurance, 5 investment benefits for elderlies

World Senior Citizen’s Day 2022 is being observed across the globe today. Senior Citizens are termed as people who are aged 60 and above. Individuals belonging to this age group are entitled to certain tax benefits.

Here are few income tax and other tax benefits that senior citizens can get on their investments.

ITR filing

According to Income-tax Act, 1961, there is no exemption to senior citizens or very senior citizens when filing a return of income.

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However, those aged 75 years or more may make use of the Finance Act 2021, under the section 194P to reduce the compliance burden and get some relief.

Starting Assessment year 2019-20, any individual to be counted under the very senior citizen category who files his return of income in the Form ITR 1/ITR 4 can file return in offline mode. Hence, it is not mandatory to complete e filing.

TDS benefit

According to the Section 194A of the Income Tax law, no tax shall be deducted at source from payment of interest by bank or post-office or co-operative bank to a senior citizen up to Rs. 50,000.

Deductions on deposits

As per the Section 80TTB of the Income Tax law, senior citizens are liable to get benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount upto Rs. 50,000.

It is important to note that all interest earned on saving and fixed deposits will be eligible for deduction.

Medical insurance premium

Due to their increased vulnerability to health issues, many medical insurance plans cover OPD expenses. Before you decide on the insurance plan, it is crucial to select the deductible or the co-payment portion in the policy.

According to Section 80D of the Income Tax Act, premium paid towards a health insurance policy (including critical illness or any other health plan) qualifies for tax benefits.  

You can also avail benefits on premium paid to self, spouse, children and parents.

However, the amount of tax benefit depends upon the age of the individual who is medically insured.

The maximum deduction on premium towards self, spouse, children and parents, has been capped at Rs 50,000 a year. In this case, the individual’s age should be over 60.

If the individual is below 60, then maximum deduction is capped at Rs 25,000.

Advance Tax Payment

According to the section 208, each individual whose estimated tax liability for the year if Rs 10,000 or more, has to pay ‘advance tax’. Resident senior citizen gets some relief in payment of advance tax under section 207.

A resident senior citizen is an individual aged 60 years or above during the relevant financial year. According to section 207, he doesn’t need to have any income from business or profession.