ITR filing deadline: Know the exemptions and deductions that senior citizens can claim

Income tax: How senior citizens can optimise tax-savings while filing returns

Income tax return-filing is a laborious process for most tax-payers and more so for senior citizens.

Super senior citizens – those over the age of 80 years – are exempt from filing returns. People in the age-group of 60-80 years do not have such leeway, but those over the age of 75 years with pension or interest income can file form 12BBA through the banks where they receive their pension instead of filing returns.

Here’s a look at certain deductions, exemptions and tax-saving instruments aimed specifically at senior citizens.

Higher basic exemption limit under the old regime

Senior citizens over the age of 60 years and super senior citizens over the age of 80 years have higher basic exemption limits of Rs 3 lakh and Rs 5 lakh respectively under the old, with-exemptions tax regime. Those earning incomes up to these thresholds do not have to pay any tax. Besides, those with taxable income of up to Rs 5 lakh can claim tax rebate, which essentially means their tax outgo will be nil.

However, under the new, simplified tax regime, the exemption limit is Rs 3 lakh for all. Those with total income of up to Rs 7 lakh, however, are eligible for rebate of up to Rs 25,000 under section 87A while filing returns.

Also read: Income tax slabs revised, standard deduction raised from Rs 50,000 to Rs 75,000 under the new tax regime in Budget 2024

Section 80C

The old, with-exemptions tax regime offers a dedicated scheme – Senior Citizens’ Saving Scheme (SCSS), which is open to individuals over the of 60 years (55 years in the case of retired civilian employees and 50 years in the case of defence employees).

The investments made – up to a limit Rs 30 lakh - qualify for tax deductions of up to Rs 1.5 lakh under Section 80C. However, interest is taxable if total interest in all SCSS accounts exceeds Rs 50,000 in a financial year. At present, the rate of interest on offer is 8.2 percent per annum, payable every quarter.

Also read: ITR filing 2023-24: How to optimise Section 80D deductions at the time of filing tax returns

Section 80D deduction

Senior citizens who pay health insurance premiums can avail of deductions of up to Rs 50,000 under section 80D. If you pay these premiums on behalf of your parents who are senior citizens, you will qualify for this deduction as well.

In this case, the total deduction that you can claim will be Rs 75,000 (Rs 50,000 plus Rs 25,000 for self, spouse and children). If you happen to be a senior citizen who pays premiums towards your parents’ health policy, the maximum deduction that you are entitled to under this section goes up to Rs 1 lakh.

Moreover, senior citizens who do not have health insurance policies or their children can avail of deductions of up to Rs 50,000 under the same section on medical expenses incurred.

Section 80TTB

Under this section, senior citizens with savings and fixed deposits in banks and post offices are eligible for tax benefits of up to Rs 50,000 on the interest earned on such accounts. Beyond this limit, the interest earned will be subject to tax.