Indian Tax Laws Aims To Ease Your Sunset Years
In industry society Senior citizens have always had a special place. This aspect has been acknowledged and respected even by the Indian tax laws, which attempt to cushion our elders by easing the tax paying and compliance process for them through certain benefits and deductions. According to the Income Tax Act, 1961, a senior citizen has been defined as an individual who attains the age of 60 years at any time during a financial year, while an individual who is 80 yeas or more is categorized as very senior citizen. These categories of individuals enjoy some additional benefits under the Act.
As compared to other individual taxpayers, senior citizen currently enjoy higher exemption limits. The financial bill, 2014 proposes an increase in the basic exemption limit for senior citizens from the existing Rs 2.5 lakh to Rs 3 lakh, while the existing limit of Rs 5 lakh continues for very senior citizens. The proposed amendment is likely to help them save more tax.
Senior citizen generally depend upon passive sources of income, like dividend, pension, rentals, interest etc. For them the most valuable asset they own is the house in which they live. The government has introduced the concept of a Reverse Mortage Scheme to further augment their income. According to this scheme when when a senior citizen mortages his house t a bank, capital gains would not arise on account of this arrangement and any payments received by him would be exempt from tax.
If an individual’s estimated net tax liability after TDS exceeds Rs 10,000 per annum then he required to settle his taxes by way of advance tax. With a view to lessen the hardship of estimating taxes and remitting the same before due dates in September, December and March, India Tax Laws provide that the senior citizens who do not have income fro business or profession are exempted from complying with advance tax payments. By way of self-assessment tax, the tax liability can be remitted.
Income From Interest
The taxable income of senior citizens, once they have retired from work, often falls below the maximum exemption limit. According to Act a senior citizen can furnish a declaration in Form 15H if his total income is less than the taxable limit, and request for non-deduction of tax at source. The senior citizen would have had to file tax return in the absence of this provision for form 15H, claiming a tax refund. This benefits should hence provide considerable relief to the senior citizens.
Deductions for Medical Expenses
To provide some relief and support to the senior citizens when they approach their golden years, the tax authorities allow a deduction of Rs 15,000 for payment towards health insurance premium for self and similar amount for health insurance for parents.If premium is paid for senior citizens then this limit is enhanced to Rs. 20,000.Expenses incurred towards medical treatment for prescribed diseases for self or dependents can be deducted up to Rs 60,000 from the taxable income in the case of senior citizens as against Rs 40,000 for non-senior citizens. A certificate from a prescribed medical practitioner can support this.Except for the enhanced tax exemption limit the finance bill 2014 has retained most of the existing provisions relating to senior citizens and no significant amendments have been introduced.
Hope that the government will continue to support such relief measures as our country’s senior citizens look forward to a comfortable retirement.