Age is just a number. Just ask someone nearing 60, and you
will probably get this response. As a senior citizen, one gets numerous
financial benefits from the government. In India, senior citizens can
avail of a host of benefits that add to their convenience and ease their
financial burden. The Income-tax Law very well takes care of the senior
citizens of the nation by offering them several tax benefits. In this article
you can gain knowledge of various benefits offered by the Income-tax Law to
senior citizens.
Person qualify as a senior citizen
and very senior citizen under the Income-tax Law
It is very important to know that
the tax benefits offered under the Income-tax Law to a senior citizen/very
senior citizen are available only to resident senior citizen and resident very
senior citizens. In other words, these benefits are not available to a
non-resident even though he may be of higher age. The age and other criteria to
qualify as a senior citizen and very senior citizen under the Income-tax Law are
as follows :
WHO IS CONSIDERED AS A SENIOR CITIZEN IN INDIA
According
to the Income Tax law, a senior citizen is an individual resident between the
age group of 60 to 80 years, as on the last day of the previous financial year.
WHO IS CONSIDERED AS A SUPER SENIOR CITIZEN IN INDIA
A
super senior citizen is an individual resident who is above 80 years, as on the
last day of the previous financial year.
CBDT’s Clarification regarding
Attaining prescribed Age of 60/80 years on 31st March itself, in case of
Senior/Very Senior Citizens whose date of birth falls on 1st April, for Income
Tax purposes
CBDT has clarified that a person having date of
birth as 1st April, would complete each year of his age on 31st March for the
purpose of determining his status as a senior/very senior citizen, as under:—
CBDT’s Circular No.
28/2016—Income Tax, dated 27th July, 2016
1. Higher tax exemption limits have been prescribed
under the past Finance Acts for resident senior citizen taxpayers who have
attained the age of sixty years. Even in such cases, the exemption limit is
still higher for very senior citizens who have attained the age of eighty
years. A doubt has been raised about the attainment of the aforesaid qualifying
ages for availing higher exemption in cases of the persons whose date of birth
falls on 1st April of calendar year. In other words, the broader question under
consideration is whether a person born on 1st April of a particular year can be
said to have completed a particular age on 31st March, on the preceding day of
his/her birthday, or on 1st April itself of that year.
2. The matter has been examined. Although specific
provision does not exist in this regard under the Income-tax Act, 1961, the
Hon’ble Supreme Court had an occasion to consider a similar issue in the case
of Prabhu Dayal Sesma v. State of Rajasthan & another AIR 1986 1948 wherein
it has dealt with on the general rules to be followed for calculating the age
of the person. In this judgment, Apex Court observed that while counting the
age of the person, whole of the day should be reckoned and it starts from 12
O’clock in the midnight and he attains the specified age on the preceding, the
anniversary of his birthday. The observation of Hon’ble Supreme Court in para 9
of the aforesaid judgment reads as under:—
“9……. At first impression, it may
seem that a person born on January 2, 1956 would attain 28 years of age only on
January 2, 1984 and not on January 1, 1984. But this is not quite accurate. In
calculating a person’s age, the day of his birth must be counted as a whole day
and he attains the specified age on the day preceding, the anniversary of his
birthday. We have to apply well accepted rules for computation of time. One
such rule is that fractions of a day will be omitted in computing a period of
time is years or months in the sense that a fraction of a day will be treated
as a full day. A legal day commences at 12 O’clock midnight and continues until
the same hour the following night. There is a popular misconception that a
person does not attain a particular age unless and until he has completed a
given number of years. In the absence of any express provision, it is well
settled that any specified age in law is to be computed as having been attained
on the day preceding the anniversary of the birthday.”
3. In view of the aforesaid judgment, the Central
Board of Direct Taxes, in exercise of powers under section 119 of the Act,
hereby clarifies that a person born on 1st April would be considered to have
attained a particular age on 31st March, the day preceding the anniversary of
his birthday. In particular, the question of attainment of age of eligibility
for being considered a senior/ very senior citizen would therefore be decided
on the basis of above criteria.
4. The field authorities are directed to take note
of above position for ascertaining the age while computing tax liability of a
taxpayer falling in ‘Individual’ category, being resident in India.
[1] Standard Deductions from Pension Income
[Section 16(ia)]
Senior citizens are allowed a
standard deduction of ₹ 50,000 on account of their pension income.
In computing income chargeable
under the head “Salaries”, shall be computed after making a standard deduction
as under:
|
S.
No.
|
Period
|
Standard
deduction
|
|
1
|
From
Assessment year 2020-21
|
Rs.
50,000/- or the amount of salary received, whichever is less.
|
|
2
|
For
Assessment year 2019-20
|
Rs.
40,000/- or the amount of salary received, whichever is less.
|
|
3
|
From
Assessment years 2006-07 to 2018-19
|
Standard
deduction not available to salaried employees under section 16(i) as
withdrawn
|
KEY
NOTE
From
Assessment year 2019-20, a standard deduction of Rs. 40,000 (Rs. 50,000/- from assessment year
2020-21) in lieu of transportation allowance of Rs.
19,200/-, medical expense reimbursement of Rs. 15,000/- was replaced for
salaried employees and pensioners.
[2] Amount deposited under Senior Citizens
Savings Scheme Rules, 2004 [Section 80C(2)(xxiii)]
With effect from assessment year
2008-09, amount deposited in an account under Senior Citizens Savings Scheme
Rules, 2004 will be eligible for deduction under section 80C.
WHO CAN
INVEST IN SENIOR CITIZEN SAVINGS SCHEME (SCSS)
(a)
As
the name suggests, this scheme is available to an individual who has attained
age of 60 years or above on the date of opening of the account.
(b)
Who
has attained the age of 55 years or more but less than 60 years and has retired
under a Voluntary Retirement Scheme (VRS) or a Special Voluntary Retirement
Scheme on the date of opening of the account within three months from the date
of retirement is also eligible.
(c)
There
is no age limit for the retired personnel of Defence Services provided they
fulfill other specified conditions.
ELIGIBILITY CRITERIA OF
JOINT SENIOR CITIZEN SAVING ACCOUNT
The joint account can be opened
only with the spouse. While opening a joint Senior Citizens Savings Scheme account, the age of first depositor is supposed to be
above 60 years. However, there is no age limit for the second applicant.
HOW MUCH CAN ONE INVEST
An individual, singly or jointly, can open an SCSS
account by investing up to Rs. 15 lakh (in multiples of Rs. 1,000) only. The
amount invested in the scheme also cannot exceed the money one receives on
retirement. Therefore, one can invest either Rs. 15 lakh or the amount received
as a retirement benefit, whichever is lower.
The account can be opened by cash for amounts below
Rs. 1,00,000 and by cheque only for Rs. 1,00,000 and above, as per the senior
citizen scheme rules. The investment date in the scheme is taken as the date on
which the cheque is realised in the government’s account.
INVEST IN THIS SCHEME AT
ANY HEAD POST OFFICE OR GENERAL POST OFFICE OR AT SELECT BRANCHES
A senior citizen can invest in this scheme by
opening either an individual or a joint (along with the spouse) account at any
head post office or general post office or at select branches of the several
designated nationalized banks.
MODE OF DEPOSIT
(1) The deposit under these rules may be made:
(a) in cash, if the amount of deposit is less than rupees
one lakh.
(b) by cheque or demand draft drawn in favour of the
depositor and endorsed in favour of the deposit office, or in favour of the
deposit office.
(2) Where a deposit is made by cheque or demand
draft, the date of deposit under these rules shall be the date of encashment of
the cheque or demand draft.
(3) Where a deposit is made by means of an
outstation cheque or demand draft, collection charges at the prescribed rate
shall be payable alongwith the deposit and the date of realisation of the
cheque or demand draft shall be the date of deposit.
TENURE OF THIS SCHEME
The tenure of the scheme is five years, which can be
further extended for three more years. Premature withdrawals are allowed, but
only after one year and with premature withdrawal charges.
NUMBER OF ACCOUNTS
There is no limit on the number of accounts that can
be opened, but the total amount in all the accounts must not breach the maximum
investment limit.
NOMINATION FACILITY
Nomination facility is also available for account
holders. A depositor can also appoint a minor as his nominee. He just needs to
provide the guardian’s details, along with the minor’s date of birth.
PREMATURE CLOSURE OF
ACCOUNT
On an application in FORM-E, in this regard, the
depositor may be permitted to withdraw the deposit and close the account at any
time after the expiry of one year from the date of opening of the account
subject to the following conditions, namely:—
(a) In case the account is closed after the expiry
of one year but before the expiry of two years from the date of opening of the
account, an amount equal to one and a half per cent of the deposit shall be
deducted and the balance paid to the depositor.
(b) In case the account is closed on or after the
expiry of two years from the date of opening of the account, an amount equal to
one per cent of the deposit shall be deducted and the balance paid to the
depositor.
(c) No deduction, as specified under rule 9, shall
be made in case of premature closure of an account at any time due to death of
a depositor.
(d) The depositor availing the facility of extension
of account under sub-rule (3) of rule 4, may be permitted to withdraw the
deposit and close the account at any time after the expiry of one year from the
date of extension of the account without any deduction.
TRANSFER OF ACCOUNT FROM
ONE DEPOSIT OFFICE TO ANOTHER
A depositor may apply on FORM-G, enclosing the pass
book thereto, for transfer of his account from one deposit office to another in
case of change of residence:
PROVIDED that where the deposit is rupees one lakh
or above, a transfer fee of rupees five per lakh of deposit shall be payable.
NON-RESIDENT INDIANs (NRIs),
PERSON OF INDIAN ORIGIN (PIOs) AND HINDU UNDIVIDED FAMILIES (HUFs)
ARE NOT ENTITLED TO OPEN A SENIOR CITIZENS SAVINGS SCHEME ACCOUNT.
The Non-Resident Indians are not eligible to open an
account under these rules.
Provided that if a depositor who subsequently
becomes a Non-Resident Indian during the currency of the account under these
rules, the account may continue till its maturity on a non-repatriation basis
and the account shall be marked as a Non- Resident account. Provided Further
that the account continued under the above proviso, shall not be extended for
any further period as provided under sub-rule (3) of rule 4.
Hindu Undivided Family is also not eligible to open
an account under these rules.
TAX DEDUCTED AT SOURCE (TDS)
Interest on Senior Citizens Savings Scheme is fully taxable. In case the interest amount earned
is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is
applicable to the interest earned.
CLOSURE OF SENIOR
CITIZENS SAVINGS SCHEME ACCOUNT
BEFORE MATURITY
In
the event of death of the primary account holder before actual maturity of the
account, the account will be closed and all the maturity proceeds will be
transferred to the legal heir/nominee. For deceased claims, the nominee or the
legal heir will have to fill out a written application in prescribed format
along with Death Certificate to facilitate the closure of the account.
RATE OF INTEREST : SENIOR CITIZEN SAVINGS
SCHEME
|
PERIOD
|
Rate of Interest Quarterly
|
|
|
From
|
To
|
|
|
O1.04.2020
|
30.06.2020
|
7.40%
|
|
01.07.2019
|
31.03.2020
|
8.60%
|
|
01.10.2018
|
30.06.2019
|
8.70%
|
|
01.07.2017
|
30.09.2018
|
8.30%
|
|
01.04.2017
|
30.06.2017
|
8.40%
|
|
01.10.2016
|
31.03.2017
|
8.50%
|
|
01.04.2016
|
30.09.2016
|
8.60%
|
|
01.04.2015
|
31.03.2016
|
9.30%
|
|
01.04.2014
|
31.03.2015
|
9.20%
|
[3] Higher Deduction limit for senior citizens in respect of health insurance
Premia : [Section 80D]
FOR
NON-SENIOR CITIZENS HAVING PARENTS WHO ARE SENIOR CITIZENS:
|
S. No.
|
Particulars
|
Maximum limit
(Amount in Rs.)
|
|
(i)
|
Medical Insurance premium + Preventive health checkup (sub
limit of Rs. 5,000) of Self, Spouse and dependent Children Non Senior
Citizens
|
25,000
|
|
(ii)
|
Medical Insurance premium + Medical expenditure +
Preventive health checkup (sub limit of Rs. 5,000) of parents who are senior
citizens
|
50,000
|
|
(iii)
|
Medical expenditure on Self, spouse and dependent Children
|
Not allowed
|
|
(iv)
|
Medical expenditure on Parents who are senior citizens
|
covered
above within the limit of Rs. 50,000
|
|
(v)
|
Maximum limit of deduction under
section 80D
|
75,000
|
FOR SENIOR
CITIZENS HAVING PARENTS WHO ARE SENIOR CITIZENS:
|
S. No.
|
Particulars
|
Maximum limit
(Amount in Rs.)
|
|
(i)
|
Medical Insurance premium + Medical expenditure+
Preventive health checkup (sub limit of Rs. 5,000) of Self, Spouse and
dependent Children
|
50,000
|
|
(ii)
|
Medical Insurance premium + Medical expenditure +
Preventive health checkup (sub limit of Rs. 5,000) of parents who are senior
citizens
|
50,000
|
|
(iii)
|
Medical expenditure on Self, spouse and dependent Children
|
covered above within the limit of Rs. 50,000
|
|
(iv)
|
Medical expenditure on Parents who are senior citizens
|
covered above within the second limit of Rs. 50,000
|
|
(v)
|
Maximum limit of deduction under section 80D
|
100,000
|
KEY NOTE
(i)
The payment for the Medical
insurance premium as well as medical expenditure should be compulsorily made by
any mode other than by way of Cash. (Eg. A/c Payee Crossed Cheque, Demand
draft, Credit Cards, Debit Cards, UPI payments, E-wallets etc). Payment for
Preventive health checkup (having sub-limit of Rs. 5,000) can however be made
by way of cash.
(ii)
The medical expenditure as mentioned
above need not be only hospitalization expenditure. It can even be regular
medical expenditure like purchase of medicines, payment to doctors etc.
(iii)
Where the payment of insurance
premium is made for more than one year, the deduction shall be allowed
proportionately in each year.
[4]
Higher Deduction limit for senior citizens in respect of medical treatment
etc. of specified disease [Section 80DDB]
Deduction
of expenses on medical treatment of specified ailments (such as AIDS, Cancer
and neurological diseases) can be claimed under section 80DDB as under:—
Quantum
of Deduction:
Deductions
totalling to the following amounts can be claimed under Section 80DDB according
to the following assessment years:—
|
Assessment Year
|
Normal
|
Senior Citizen
|
Very Senior Citizen
|
|
From
2019-20
|
Rs. 40,000/- or the amount
actually paid, whichever is less
|
Deduction of Rs. 1,00,000/- for
both senior citizens and very senior citizens
|
|
|
For
2018-19
|
Rs. 40,000/- or the amount
actually paid, whichever is less
|
Rs. 60,000/- :
If the person for whom such
expenditure is incurred happens to be a senior citizen(age of 60 years or
more but less than 80 years), the maximum deduction shall be allowed for a
sum of Rs. 60,000/-
|
Rs. 80,000/- :
For the expenditure incurred in
respect of the medical treatment of a “very senior citizen” (who is of the
age of 80 years or more at any time during the relevant previous year)
|
|
For
2017-18
|
Rs. 40,000/- or the amount
actually paid, whichever is less
|
Rs. 60,000/- :
If the person for whom such
expenditure is incurred happens to be a senior citizen(age of 60 years or
more but less than 80 years), the maximum deduction shall be allowed for a
sum of Rs. 60,000/-
|
Rs. 80,000/- :
For the expenditure incurred in
respect of the medical treatment of a “very senior citizen” (who is of the
age of 80 years or more at any time during the relevant previous year)
|
|
For
2016-17
|
Rs. 40,000/- or the amount
actually paid, whichever is less
|
In case of senior citizen Rs.
60,000 or amount actually paid, whichever is less
|
For very senior citizens Rs.
80,000 is the maximum deduction that can be claimed
|
|
For
2015-16
|
Rs. 40,000/- or the amount
actually paid, whichever is less.
|
In case of senior citizen, Rs.
60,000 or amount actually paid, whichever is less
|
|
ESSENTIAL CONDITIONS:
(i) The assessee has actually paid any amount
for the medical treatment of a specified disease or ailment as prescribed by
the Board under rule 11DD of Income Tax Rules, 1962 (Such as Cancer, full blown
AIDS, Thalassemia, Hemophilia etc.).
(ii) The expenditure is actually incurred for
medical treatment of the assessee or his dependent spouse, children, parents,
brothers & sisters and in the case of Hindu Undivided Family such person
may be any member of the Hindu Undivided Family who is dependant on the Hindu
Undivided Family.
(iii) Deduction under this
section shall be reduced by the amount received, if any, under Medi-claim
insurance from an insurer, or reimbursed by an employer, for the medical
treatment of the person referred to above.
FOR EXAMPLE:
Mr. ‘A’ has incurred Rs. 35,000/- on the treatment
of a specified disease for himself, in this case deduction allowed shall be Rs.
35,000/ - but if a claim of Rs. 15,000/- has been received under Medi-claim
policy, deduction allowed shall be Rs. 20,000/-.
(iv) A certificate in the prescribed form (Form No.
10-I) from a neurologist, an oncologist, a urologist, a hematologist, an
immunologist or such other specialist as may be prescribed, working in a
Government hospital is required.
TEXT OF RULE 11DD(1)
“SPECIFIED DISEASES AND
AILMENTS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80DDB
(1) For the purposes of section 80DDB, the following
shall be the eligible diseases or ailments:
(i) Neurological Diseases where the disability level
has been certified to be of 40% and above,—
(a) Dementia;
(b) Dystonia Musculorum
Deformans;
(c) Motor Neuron Disease;
(d) Ataxia;
(e) Chorea;
(f) Hemiballismus;
(g) Aphasia;
(h) Parkinsons Disease;
(ii)
Malignant Cancers;
(iii) Full
Blown Acquired Immuno - Deficiency Syndrome (AIDS);
(iv) Chronic
Renal failure;
(v)
Hematological disorders :
(a) Hemophilia;
(b) Thalassaemia
|
S. No.
|
Disease
|
Certificate to be taken from
|
|
(i)
|
Neurological Diseases where the
disability level has been certified to be of 40% and above —
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinsons Disease
|
Neurologist having a Doctorate
of Medicine (D.M.) degree in Neurology or any equivalent degree, which is
recognised by the Medical Council of India
|
|
(ii)
|
Malignant Cancers
|
Oncologist having a Doctorate
of Medicine (D.M.) degree in Oncology or any equivalent degree which is
recognised by the Medical Council of India
|
|
(iii)
|
Full Blown Acquired
Immuno-Deficiency Syndrome (AIDS)
|
Any specialist having a
post-graduate degree in General or Internal Medicine, or any equivalent
degree which is recognised by the Medical Council of India
|
|
(iv)
|
Chronic Renal failure
|
A Nephrologist having a
Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a
Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree,
which is recognised by the Medical Council of India
|
|
(v)
|
Hematological disorders
(i) Hemophilia
(ii) Thalassaemia
|
A specialist having a Doctorate
of Medicine (D. M.) degree in Hematology or any equivalent degree, which is
recognised by the Medical Council of India
|
[5] Higher Deduction in respect of interest income
to senior citizen [Section 80TTB]
As
per Section 80TTB, all the senior citizen can claim deduction in respect
of saving bank interest, interest on any deposit with post office or bank or
co-operative society and also on the deposits made under Senior Citizen Savings
Scheme (SCSS) upto Rs. 50,000/- in a financial year. However, no deduction
under section 80TTA shall be allowed in these cases.
TYPE OF
INTEREST ON WHICH DEDUCTION IS AVAILABLE UNDER SECTION 80TTB
Any interest income earned by a
senior citizen on deposits is allowable as a deduction under section
80TTB. The deposits should be held with any of the following –
(i)
A banking company (i.e. banks) to
which the Banking Regulation Act applies (it also includes banks referred to in
section 51); or
(ii)
A co-operative society being engaged
in carrying on banking business (it also includes a co-operative land
development bank or a co-operative land mortgage bank); or
(iii)
A post office as defined under
section 2 (k) of the Indian Post Office Act.
Section
80TTB (2) specifically states that any interest income
earned from the savings account held by the firm or Association of Persons
(AOP) or Body of Individual (BOI) shall not be allowed as deduction under section 80TTB to
partners of the firm or members of the association or individual of the BOI.
QUANTUM OF
DEDUCTION AVAILABLE UNDER SECTION 80TTB
The maximum amount of deduction
available under section 80TTB is
lower of the following –
(i)
The whole of the interest income; or
(ii)
Rs. 50,000.
DIFFERENCE
BETWEEN SECTION 80TTA AND SECTION 80TTB
Both section 80TTA and section
80TTB provides deduction towards interest income. The following table would
help to understand the basic difference between section 80TTA and section 80TTB –
|
Particulars
|
Section 80TTA
|
Section 80TTB
|
|
Eligibility
|
An individual and a Hindu Undivided Family (other
than senior citizens) can claim deduction under section 80TTA.
|
Only a senior citizen can claim deduction under section 80TTB.
|
|
Type of income allowed as a deduction
|
Interest income earned on a savings account.
It does not include fixed deposits interest or recurring
deposits interest.
|
Interest income earned on all types of deposits.
It includes interest earned on a savings account, fixed
deposit or recurring deposits.
|
|
Maximum amount of deduction
|
Rs. 10,000
|
Rs. 50,000
|
NO TAX DEDUCTION AT SOURCE IF
INTEREST DOES NOT EXCEED Rs. 50,000/- DURING A FINANCIAL YEAR [THIRD PROVISO TO
SECTION 194A(3)
Third proviso to Section 193A(3)
provides that no tax deduction at source will happen for senior citizen as long
as interest on all these deposits for all the branches of a bank taken together
does not exceed Rs. 50,000/- during a financial year. A senior citizen has to
submit form No. 15H only if he wants to receive the interest without deduction
of tax at source and such interest exceeds Rs. 50,000 in a year.
[6] Rebate of
Income Tax [Section 87A]
Section
87A provides for Income Tax Rebate to individuals earning income below the
specified limit.
ESSENTIAL CONDITIONS:
(i) This
rebate is available from the assessment year 2014-15.
(ii) Section
87A is applicable on Total Income and not on Gross Income.
(iii) This
rebate is allowed before the levy of Health and Education Cess.
(iv) This rebate is not available to Super Senior
Citizen i.e. individuals who has attained the age of 80 years because their
income upto Rs. 5,00,000/- is exempt from income-tax and this section does not
apply on above Rs. 5,00,000/-.
(v) Negative income from house property (like
interest on house loan for self-occupied property) is also to be
reduced/considered to get total income.
(vi) Filing of income-tax return is necessary in
spite of fact that after allowing this rebate under section 87A no tax is payable.
QUANTUM OF DEDUCTION:
The total amount of rebate allowed under section 87A
would be—
(i) 12,500/-; or
(ii) the total tax payable,
v whichever is less.
|
For Assessment year
|
Applicable only if total income
does not exceed
|
Amount of rebate under section
87A
|
|
2021-22
|
5,00,000
|
12,500
|
|
2020-21
|
5,00,000
|
12,500
|
|
2019-20
|
3,50,000
|
2,500
|
|
2018-19
|
3,50,000
|
2,500
|
|
2017-18
|
5,00,000
|
5,000
|
|
2016-17
|
5,00,000
|
2,000
|
|
2015-16
|
5,00,000
|
2,000
|
|
2014-15
|
5,00,000
|
2,000
|
PROVISIONS ILLUSTRATED
|
Total Income
(in Rs.)
|
Tax payable
(before Cess)
|
Rebate under section 87A
|
Tax payable + 4% Health and
Education Cess
|
|
3,00,000
|
2,500
|
2,500
|
Nil
|
|
4,00,000
|
7,500
|
7,500
|
Nil
|
|
5,00,000
|
12,500
|
12,500
|
Nil
|
|
5,10,000
|
14,500
|
Nil
|
14,500 + 580
|
FOR NON DEDUCTION OF TAX AT SOURCE – SUBMIT FORM 15H
If the interest income earned by
Senior citizens on a bank deposit (including recurring deposits, deposits in
other branches of the same bank, deposits in a minor's name) exceeds Rs 50,000
in a financial year, the banks deduct tax at source (TDS) @10 % on the entire
interest income.
A senior citizen may submit form No. 15H to the deductor for non-deduction of TDS, if the total income in a financial year is within the exemption limit, Form 15H (Form 15G is for non-senior citizens). Remember, if the deposits are for more than a year, one has to submit form no 15H every year ideally in March/April.
[7]
Higher tax basic exemption limit for Senior citizen
In case of a resident senior citizen
(who is 60 or above at any time during the previous year but less than 80 on
the last day of the previous year), income up to Rs 3 lakh is exempt from tax,
income from Rs 3 lakh to Rs 5 lakh is taxed at 10%, from Rs 5 lakh to Rs 10
lakh at 20%, and above Rs 10 lakh at 30%.
In case of a resident super senior
citizen (who is 80 or above at any time during the previous year), income up to
Rs 5 lakh is exempt from tax, income from Rs 5 lakh to Rs 10 lakh is taxed at
20%, and above Rs 10 lakh at 30%. The amount of income tax and the applicable
surcharge (15% of such tax, where total income exceeds Rs 1 crore) shall be
further increased by Health & Education cess i.e. 4 per cent of the total
tax payable.
INCOME TAX SLABS FOR SENIOR CITIZENS (MORE THAN 60
YEARS BUT LESS THAN 80 YEARS OF AGE)
|
FOR EVERY INDIVIDUAL, RESIDENT
IN INDIA, WHO IS OF THE AGE OF 60 YEARS
OR MORE BUT LESS THAN 80 YEARS
AT ANY TIME DURING THE FINANCIAL YEAR [ASSESSMENT YEAR : 2020-21 &
2021-22]
|
|||
|
Total Income
|
Tax Rates
|
Health & Education Cess
|
Surcharge
|
|
Upto Rs. 3,00,000
|
Nil
|
Nil
|
Nil
|
|
Rs. 3,00,000 to Rs. 5,00,000
|
5% of income which exceeds Rs.
3,00,000 up to Rs. 5,00,000
|
4%
|
Nil
|
|
Rs. 5,00,000 to Rs. 10,00,000
|
Rs. 10,000 + 20% of income
which exceeds Rs. 5,00,000 up to Rs. 10,00,000
|
4%
|
Nil
|
|
Rs. 10,00,000 to Rs. 50,00,000
|
Rs. 1,10,000 + 30% of income
which exceeds Rs. 10,00,000 up to Rs. 50,00,000
|
4%
|
Nil
|
|
Rs. 50,00,000 to Rs.
1,00,00,000
|
13,10,000 + 30% of income which
exceeds 50,00,000 up to Rs. 1,00,00,000
|
4%
|
10%
|
|
Rs. 1,00,00,000 to Rs.
2,00,00,000
|
28,10,000 + 30% of income which
exceeds Rs. 1,00,00,000
|
4%
|
15%
|
|
Rs. 2,00,00,000 to Rs.
5,00,00,000
|
Rs. 58,10,000 + 30% of income
which exceeds Rs. 2,00,00,000
|
4%
|
25%
|
|
Above Rs. 5,00,00,000
|
Rs. 1,48,10,000 + 30% of income
which exceeds Rs. 5,00,00,000
|
4%
|
37%
|
INCOME TAX SLABS FOR SUPER SENIOR CITIZENS (MORE THAN 80 YEARS OF AGE)
|
FOR EVERY INDIVIDUAL BEING A
RESIDENT IN INDIA, WHO IS OF THE AGE OF 80 YEARS OR MORE AT ANY TIME DURING
THE FINANCIAL YEAR
[ASSESSMENT YEAR : 2020-21&
2021-22 ]
|
|||
|
Upto Rs.5,00,000
|
Nil
|
Nil
|
Nil
|
|
Rs.5,00,000 to Rs.10,00,000
|
20% of income which exceeds to
Rs. 5,00,000 upto Rs. 10,00,000
|
4%
|
Nil
|
|
Rs. 10,00,000 to Rs. 50,00,000
|
Rs. 1,00,000 + 30% of income
which exceeds Rs. 10,00,000 upto Rs. 50,00,000
|
4%
|
Nil
|
|
Rs.50,00,0001, to
Rs.1,00,00,000
|
Rs. 13,00,000 + 30% of income
which exceeds Rs. 50,00,000 upto Rs. 1,00,00,000
|
4%
|
10%
|
|
Rs. 1,00,00,000 to Rs.
2,00,00,000
|
Rs. 28,00,000 + 30% of income
which exceeds Rs. 1,00,00,000
|
4%
|
15%
|
|
Rs. 2,00,00,000 to Rs.
5,00,00,000
|
Rs. 58,00,000 + 30% of income
which exceeds Rs. 2,00,00,000
|
4%
|
25%
|
|
Above Rs. 5,00,00,000
|
Rs. 1,48,00,000 + 30% of income
which exceeds Rs. 5,00,00,000
|
4%
|
37%
|
MARGINAL RELIEF :
(i) In case a person having a total income exceeding
Rs. 50, 00,000/- but does not exceed Rs. 1,00,00,000/- the total amount payable
as income-tax and surcharge on such income shall not exceed the total amount
payable as income-tax on a total income of Rs. 50,00,000/- by more than the
amount of income that exceeds Rs. 50,00,000/-
(ii) In case a person having a total income
exceeding Rs. 1,00, 00,000/- but does not exceed Rs. 2,00,00,000/- the total
amount payable as income-tax and surcharge on such income shall not exceed the
total amount payable as income-tax on a total income of Rs. 1,00,00,000/- by
more than the amount of income that exceeds Rs. 1,00,00,000/-.
(iii) In case a person having a total income
exceeding Rs. 2,00,00,000/- but does not exceed Rs. 5,00,00,000/- the total
amount payable as income-tax and surcharge on such income shall not exceed the
total amount payable as income-tax on a total income of Rs. 2,00,00,000/- by
more than the amount of income that exceeds Rs. 2,00,00,000/-.
(iv) Further in case the total amount payable as
income-tax and surcharge on total income exceeding Rs. 5,00,00,000/- shall not
exceed the total amount payable as income-tax on a total income of Rs.
5,00,00,000/- by more than the amount of income that exceeds Rs. 5,00,00,000/-.
[8]
Exemption from e-filing of income tax return to very
senior citizen
From the assessment year 2017-18
onwards any taxpayer filing return of income in Form ITR 1/4 and having a
refund claim in the return or having total income of more than Rs. 5,00,000 is
required to furnish the return of income electronically with or without digital
signature or by using electronic verification code.
However,
from the assessment year 2019-20 onwards, a Senior Citizen aged 80 years or
more filing his return of income in Form SAHAJ (ITR-1) or SUGAM
(ITR-4) and having total income of more than Rs. 5,00,000 or having a
refund claim can file his return of income in paper mode. For
such individuals, electronic filling of ITR 1 or ITR 4 (as the case
may be ) is not mandatory. However, he may go for e-filing if he wishes.
[9]
Senior Citizens not having Business Income exempt from Advance tax
payment
As per section 208, every
person whose estimated tax liability for the year is Rs. 10,000 or more, shall
pay his tax in advance, in the form of “advance tax”.
However,
section 207 gives relief from payment of advance tax to a resident senior
citizen (i.e., an individual of the age of 60 years or above during the
relevant financial year). As per section 207 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.
[10]
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.
BASIC
FEATURES OF THE SCHEME
The reverse mortgage scheme is
exactly opposite of the pure home loan product where the borrower receives
money in installments and which gets paid off in full later against the pure
mortgage loan where the borrower borrows in lump sum and repays in
installments. The borrower can also get some lump sum under the scheme.
TRANSFER
OF CAPITAL ASSET UNDER ‘REVERSE MORTGAGE SCHEME’
The transfer of a residential house
property by way of a reverse mortgage as per the Reverse Mortgage
Scheme made and notified by the Central Government for senior citizens, is
not liable to be taxed as Capital Gain (nor under any other head of
income).
In order to resolve the tax issues arising out of the
reverse mortgage scheme a new clause (xvi) in Section 47 of the Income Tax Act
which provides that any transfer of a capital asset in a transaction of reverse
mortgage under a notified scheme shall not be regarded as a transfer and shall,
therefore, not attract capital gains tax.
REVERSE MORTGAGE LOAN ELIGIBILITY CRITERIA
(i)
A reverse mortgage is available to
anybody over the age of 60. In case a couple wishes to opt for one, at least
one of the participants should be over the age of 60 years. Many banks require
the other spouse to be 55 and above, while some require him/her to be at least
58.
(ii)
The borrower must have a fully owned
house. In case of a couple, at least one of them must own a house. In some
cases, banks take over the home loan and pay off the balance in monthly
instalments to the borrower.
(iii)
The property must have been in
existence for at least 20 years.
(iv)
The property must be the permanent
residence of the individual.
(v)
The property must be self-acquired,
which means the property cannot be inherited or a gift.
(vi)
Properties that are let out or being
used for commercial uses are not eligible.
KEY NOTE
(i)
A reverse mortgage is available to
citizens of India who are over the age of 60. In case of a couple looking for a
reverse mortgage, at least one of the participants must be over the age of 60,
while the other has to be over 55 or 58 years of age, depending on the bank.
(ii)
The maximum loan provided under this
scheme is 60% of the property cost, up to a maximum of Rs.50 lakh.
(iii)
The minimum tenure of the loan is 10
years while the maximum tenure varies from bank to bank.
(iv)
The borrower can either opt for
monthly, quarterly, yearly or lump sum payments.
(v)
The property must be revaluated
every 5 years by the bank or housing finance company.
(vi)
The income received from a reverse
mortgage will be tax free as it is considered a loan.
(vii)
The rates on a reverse mortgage vary
from bank to bank and the type of loan the borrower has opted for.
(viii)
The processing fee of a reverse
mortgage varies from 0.15% - 1.50%, depending on the bank.
(ix)
A borrower can prepay the loan at
any point during the term of the loan without attracting a prepayment fee, in
most cases.
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