Certain income tax benefits are available to senior citizens or individuals over 60. There are several tax benefits to their advantage, ranging from a higher income tax exemption limit to a higher deductible limit on health insurance premiums to a higher TDS limit on income from deposits.
Let’s look at some income tax and other benefits that seniors can get on their investments.
ITR Submission
The Income-tax Act of 1961 does not exempt senior citizens or very senior citizens from filing an income tax return. However, to provide relief to senior citizens (those aged 75 or older) and reduce the compliance burden on them, section 194P of the Finance Act of 2021 may be used.
Offline ITR Filing Mode
From Assessment Year 2019-20 forward, a very senior citizen pointing his return of income in Form ITR 1/ ITR 4 can do so on paper, i.e., e-filing ITR 1/ ITR 4 is not required. He may, however, opt for e-filing if he so desires.
Tax Payment in Advance
According to Section 208, anyone whose estimated tax liability for the year is Rs. 10,000 or more must pay his tax in advance, in “advance tax.” Section 207, on the other hand, exempts a resident senior citizen from paying advance tax.
A resident senior citizen (i.e., an individual 60 years or older during the relevant fiscal year) who does not have any income from business or profession is not required to pay advance tax, according to section 207.
Deposits are eligible for a deduction.
Section 80TTB of the Income Tax Act contains tax benefits available to senior citizens on the interest income from sediments with banks, post offices, or co-operative stakes of up to Rs. 50,000. Under this provision, interest is earned on savings deposits and fixed deposits.
The advantage of TDS
Section 194A of the Income Tax Act provides that no tax shall be deducted from interest payments to a senior citizen by a bank, post-office, or co-operative bank up to Rs. 50,000. As a result, the limit must be calculated for each bank individually.
The cost of medical insurance
Senior residents are more likely to be hospitalized and spend a lot of money on medications and routine check-ups, among other things. There are unique and exclusive health insurance plans for senior citizens, and they should consider purchasing health insurance that covers OPD expenses.
Bonus on bank FDs
Senior citizens aged 60 and up are eligible for additional interest on bank FDs. Most banks will give you a 0.5 percent discount on the rack rate for your chosen duration. The higher rate applies to any tax-saving deposit opened in the bank. Proof of age must be submitted to the bank at the initial deposit.
Savings Plan for Senior Citizens
Senior Citizens’ Saving Scheme (SCSS), probably the first choice of most retirees, is a must-have in most retirees’ investment portfolios. As the name implies, this method is only available to senior citizens or early retirees. Anyone over 60 can apply for SCSS at a post office or a bank. SCSS has a five-year term, but it can be extended for another three years after it matures.
15H Form
Suppose the total income in a fiscal year as a senior citizen is within the exemption limit. The depositor may submit Form 15H (Form 15G for non-senior citizens) to the bank for not deducting TDS. Remember that if the deposits are for more than a year, these forms must be submitted every year, ideally in April.
This release is articulated by Prittle Prattle News in the form of an authored article.
