Income Tax Savings : If you are also a senior citizen (above 60 years of age) or super-senior citizen (above 80 years of age), you can increase your tax savings through these exemptions while filing income tax returns for assessment year 2025-26.
Income Tax Savings : With the rising costs in the country, living on just one source of income is a big challenge. Especially for senior citizens, who are not actively employed after retirement. However, senior and super senior citizens who live on a fixed pension income get many exemptions under the Income Tax Act-1961 to reduce their financial stress and help them in old age.
If you are also a senior citizen (above 60 years of age) or super-senior citizen (above 80 years of age), you can increase your tax savings through these exemptions while filing income tax returns for assessment year 2025-26.
Exemption limit: Up to Rs 5 lakh
The exemption limit is the maximum amount beyond which income tax calculations do not apply. Under the Income Tax Act, senior citizens are eligible for an exemption of up to Rs 3 lakh. For super-senior citizens, the exemption limit is Rs 5 lakh, while for individuals below 60 years of age, the maximum is Rs 2.5 lakh.
The advantage of this exemption limit is that it reduces the tax liability of senior citizens. Also, more money is left for their expenses.
Medical expenses: Benefit up to Rs 50,000
Money spent on treatment and medicines is an important part of the expenses of senior citizens. Senior citizens also get some tax benefits on medical expenses. Under Section 80D of the Income Tax Act, senior citizens are eligible for a deduction of up to Rs 50,000 on health insurance premium paid in a financial year.
Under Section 504 of 80DDB, senior citizens can also claim a deduction of Rs 1 lakh on medical expenses for listed ailments.
Tax deduction on interest earned from savings
Interest earned from savings accounts, fixed and recurring deposit accounts also gets the benefit of tax deduction under the Income Tax Act. This is beneficial for those who depend only on interest income.
Senior citizens can claim deduction of up to Rs 50,000 on income from savings accounts, fixed and recurring deposit accounts under 80TTB.
…there is no need to pay advance tax
Senior citizens are not required to pay advance tax. However, if they earn income from a business or professional income, they will have to pay advance tax. Also, senior citizens above the age of 75 years are not required to file returns if they only receive pension income and interest from a bank. This has to be confirmed in Form 12BB.
-Sumit Agarwal, CA
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