• Taxpayers, especially senior citizens can opt for the new tax regime for FY 2022-2023 or continue with the existing regime.
Taxpayers, especially senior citizens, can opt for the new tax regime for FY 2022-2023 or continue with the existing regime. From assessment year 2022-23, older persons who are 75 years of age or above and receive only pension income and interest income which they keep in the bank are exempted from filing ITR. For senior citizens below the age of 60 to 80 years, the standard exemption limit has been set at Rs. 3 lakh, while very senior citizens above 80 years have a rebate of up to Rs. 5 lakh per financial year. There are other options for taxpayers to reduce their income tax, however, most taxpayers are aware of the ₹1.5 lakh deduction allowed under section 80C. According to an interview with Dr. Suresh Surana, Founder, RSM India, here's how senior citizens can make tax-saving investments apart from Section 80C to reduce their tax burden.
Dr. Suresh Surana said that apart from the benefit of deduction, which can be claimed under section 80C of the Income Tax Act, 1961 (hereinafter referred to as the 'IT Act'), every senior citizen can avail of the following tax planning options or tools: may consider:
1. Contribute to National Pension Scheme (NPS) to claim additional deduction of Rs. 50,000 under section 80CCD(1B)
Pension Fund Regulatory and Development Authority has increased the maximum age for joining NPS to 65 years and accordingly a person in the age group of 60 to 65 years can also join NPS and continue in NPS till the age of 70 years . Such senior citizens can not only claim deduction of contribution made to such NPS u/s 80C within the overall cumulative limit of Rs. 150,000 per annum but also claim additional deduction under section 80CCD(1B) up to Rs. 50,000 in a financial year that exceeds the combined deduction of Rs.1,50,000 per annum.
2. Profit deduction w.r.t. medical insurance premium
As per the provisions of Section 80D of the IT Act, resident senior citizens can avail a higher deduction of up to Rs. 50,000 towards payment of premium for a medical insurance policy. In addition, senior citizens above the age of 60 years who are not covered by health insurance are allowed a deduction of Rs. 50,000 for actual medical expenses.
Senior citizens may also consider claiming deduction (as relevant) w.r.t. to the following:
1. Deduction in respect of medical treatment of specified diseases
Section 80DDB of the IT Act provides for resident individual taxpayers to claim deduction for the amount actually paid for medical treatment of specified disease (such as dementia, Parkinson's, malignant cancer, etc.). , parents, brothers and sisters). Such deduction is available to senior citizens in a financial year and will be limited to the amount of actual expenditure or Rs. 1,00,000, whichever is less and will be allowed only in cases where the specified disease is certified by the prescribed medical authority. Also, it is pertinent to note that any insurance claim received by such senior citizens should be reduced by the amount of deduction claimed.
2. Deduction in case of person with disability
With increasing age, senior citizens generally suffer from various diseases and may become victims of disability as a result of the same. Such senior citizens suffering from specified disability can avail a flat deduction per year of Rs. 75,000 for general disability and Rs. 1,25,000 for severe disability based on the extent of disability as certified by the medical practitioner.
3. Donation to charitable organization or institution
Senior citizens can donate for charitable purposes. However, donations made to approved charitable institutions can be claimed as deductions under section 80G of the IT Act. An indicative list of such approved institutions may include PM National Relief Fund, National Defense Fund, Fund for Military, Registered Public Charitable Trust etc. Such deduction will be allowed for 50% or 100% of the donation (with or without qualifying limit) depending upon the organization/institution to whom such donation is made.
4. Deduction w.r.t. fixed interest income
Senior citizens can claim deduction under section 80TTB of the IT Act in respect of interest on deposits with banking company, co-operative society and post office up to Rs. 50,000 in a particular financial year. It is pertinent to note that such deduction is available to senior citizens not only in respect of savings account interest but also for interest on fixed deposits.
In addition to the above, section 194P of the Income Tax Act, 1961 provides for exemption of resident senior citizens above the age of 75 years from filing income tax return, provided the pension income and interest income of such senior citizens are the only and difference.
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