According to the Income Tax Act, 1961, persons attaining the age of 60 and 80 anytime during a financial year are viewed as senior and super-senior citizens, respectively.
They enjoy an enhanced basic exemption limit of income up to Rs 3 lakh and Rs 5 lakh respectively while other individual taxpayers enjoy an exemption limit of up to Rs 2.5 lakh.
The higher slab rates allow a tax saving of Rs 5,000 for senior citizens and Rs 25,000 for super senior citizens. However, this benefit of enhanced exemption is limited to resident senior citizens, ie, those who are in India for at least 182 days during a financial year.
The tax reliefs provided in India are comparable with some developed countries. For instance, in Singapore, those aged 60 and above are granted a deduction of SGD 8,000 per annum.
However, globally, a higher relief is granted to those aged who suffer from a handicap. Let us hope that a similar restructuring is considered in the ensuing Union Budget.
Section 80D of the Act confers senior citizens with a deduction for payment of medical insurance premium for an amount not exceeding Rs 30,000 while for others it is restricted to Rs 25,000.
This is over and above the benefits provided under section 80C of the Act. Further, the said deduction is available even on medical expenditure incurred provided the individual concerned does not have a health insurance policy.
Further, in order to claim the deduction under section 80D, the payments can be effected by modes other than cash. A maximum deduction of Rs 60,000 can also be availed by senior citizens for medical treatment of specific diseases under section 80DDB of the Act.
Until recently, the said deduction was available provided a certificate is obtained from a specialist working in a government hospital. Recently, the Central Board of Direct Taxes has simplified the said requirement whereby a certificate can also be obtained from a private hospital.
Senior citizens are also provided reliefs on payment of advance tax and deduction of taxes at source. For instance, a senior citizen with no business income is exempted from payment of advance tax as provided under section 207 of the Act.
A senior citizen can also claim exemption from tax deduction at source on interest income earned on deposits if his income is less than the taxable limit. Further, such individuals whose income is less than the taxable limit can also claim an exemption from furnishing a Permanent Account Number.
From a compliance standpoint, the senior citizens are also granted exemption from compulsory e-filing of income tax returns and can continue to file their income tax return in paper mode.
(The author is a lawyer who specialises in tax and corporate laws, besides being a chartered accountant, cost accountant and company secretary)
