Tax treat for senior citizens..GOOD TO READ AGAIN FOR THOSE WHO HAVE MEMORY LOSS EVERY MONTH.. *************************** PERSONA FINANCETax treat for senior citizens Though we don’t have social security net for senior citizens, the government grants various benefits to senior citizens in the form of special savings schemes, pension schemes, postal schemes and health insurance schemes/policies etc. Balwant Aditya Kumar Jain It is well-known that the true character of a society is judged by the way it treats its elders. The senior citizens of a country need to be taken care of by the society in general and by their children in particular. Though we do not have the social security net for senior citizens, but the government tries its best to make their lives comfortable by giving various tax exemptions. The government grants various benefits to senior citizens in the form of special savings schemes, pension schemes, postal schemes and health insurance schemes/policies etc. This article dwells upon the various benefits extended to senior citizens under the provisions of income tax laws. Who is a senior citizen? As per the provisions of the income tax laws, any person who is above 60 years of age or has already completed 60 years as on the last day of the financial year is treated as a senior citizen for the whole year. Let us now understand the various benefits available to senior citizens. Higher income tax slabs The basic individual exemption limit for general public is Rs 2 lakh up to which a person does not have to pay any income tax. However, in case of senior citizens who are Indian Residents, the basic exemption limit applicable is Rs 2.50 lakh. Moreover, for the special class of senior citizens i.e. the persons who have completed 80 years on the last day of the financial year, the basic exemption limit is Rs 5 lakh. So in case you fall in this special category of very senior citizen, you do not have to pay any tax till you earn Rs 5 lakh in a year. Rebate on Mediclaim The deduction available for health insurance premium popularly known as Mediclaim is Rs 15,000 for a family. However, if the premium is paid for a senior citizen, the amount of deduction available goes up to Rs 20,000. Likewise for your parents, there is a separate deduction of Rs 15,000 for health insurance premium paid by you. In case the premium is paid for the parent/s who is/are a senior citizen, the person paying the premium can claim a separate deduction of Rs 20,000 in addition to claim of Rs 15,000 in respect of premium paid for self, spouse and children. In case of the person paying the premium and his parents both are senior citizens, the deduction available under Section 80 D for each category will be up to Rs 20,000 each. In that case this person can claim a deduction of Rs 40,000 under Section 80 D. In addition to Section 80 D, the income tax also allows deduction for expenditures actually incurred for treatment of family members in respect of some specified diseases. A deduction under Section 80DDB is available for Rs 40,000 for treatment of self, spouse, siblings, parents, and children for expenditure incurred for treatment of specified disease. However, this deduction goes up to Rs 60,000 in case the person to be treated is a senior citizen. This way we find that the Income Tax Act has provided quite a few benefits to senior citizens to help them wade through their old age, by way of higher benefit for Mediclaim/medical expenses when the medical cost constitute a significant portion of their budget. Form No. 15 H Senior citizens generally face the problem of cash crunch and this gets aggravated when tax is deducted from their income especially when they do not have taxable income. So here also the income tax laws allow them a concession by letting them submit form No. 15 H for no deduction of tax. Senior citizens can submit form no. 15H for receipt of income without deduction of tax at source for income like interest, withdrawals from NSS account, and income from units of mutual funds if total tax liability is nil for the year. This form needs to be submitted every year to the payer of the income. Exemption from advance tax Generally for the senior citizens who have retired and are living on their savings in the form of deposits, they have to go through the tedious process of having to pay the advance tax three times in a year, in case the tax liability payable on their total income exceeds the tax already deducted by Rs 10,000. In order to relieve such senior citizens, the income tax laws provide that these senior citizens do not have to pay any advance tax, and can pay their taxes while filing their income tax returns. However, this relief for exemption from payment of advance tax is available only if you are not having any income which is taxable under the head business or profession. So in case you have taken up consultancy after your retirement, you will still have to pay the advance tax but many senior citizens have been spared from the tedious procedure of payment of advance tax. Rebate under Section 80 C The deduction under Section 80 C is normally availed by people who are working through their career and the items generally covered are school fee, repayment of home loan, life insurance premium and provident fund contribution etc. But only a few items are available for senior citizens under Section 80 C like contribution towards senior citizen savings scheme. The interest on this scheme is higher than the generally offered under bank fixed deposit and at the same time they can avail deduction under Section 80C. This way you see that the Government of India provides several tax-saving provisions for senior citizens. Their lives will become more comfortable if we as a family unit show compassion towards them and make society a better place for them in their sunset years. The author is CFO, Apnapaisa. The views expressed in this article are his own
Posted on: Mon, 15 Jul 2013 03:24:54 +0000
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