Budget 2018 is good budget for Senior Citizens of country. According to Indian Income Tax Act give tax e-filing is hassle free process to senior citizens. It will reduce income tax burden on senior citizens. Also, this budget has announced several tax benefits for senior citizens. We discuss new income tax benefits for senior citizens below.
Income Tax benefits of Senior citizens for purpose of Income Tax
For purpose of Income Tax, there are two types of senior citizens
- Senior Citizens- Those ages is above 60 years
- Super Senior Citizens- Those ages is above 80 years
Benefits of Slab Rates
Income tax slab rates for senior citizens are different as compared to non-senior citizens. Slab rates are as follows. Also read How to make the best use of your tax saving through investment
|Details||Non-Senior Citizen||Senior Citizen||Super-Senior Citizen|
|Tax Free||Up to 2.5 Lakh||Up to 3 Lakh||Up to 5 Lakhs|
|10 per cent Tax||2.5 Lakh to 5 Lakh||3 Lakh to 5 Lakh||NA|
Tax exemption on Interest Income from Fixed deposit and recurring deposits under section 80TTB
Mostly senior citizens depend on fixed deposits for their regular income. With effect from this budget 2018, new section 80TTB has been introduced which allows for deduction for interest of Rs. 50,000. As per slab rates of senior citizens, amount earned over Rs. 50,000 will be taxable.
For example, if senior citizen earns interest income of Rs. 75,000 and out of this Rs. 50,000 is allowed as deduction under section 80TTB and balance Rs. 25,000 will be taxable as per slab rates. However, it is important to note that no deduction under section 80TTA of Rs. 10,000 for interest on savings account.
Medical Insurance Premium exemption increase under section 80D
Medical insurance premium check up limit for senior citizens under section 80D has been increased from Rs. 30,000 to Rs 50,000 in budget 2018. Moreover, this is good news people above 80 years age, deduction under section 80D is allowed not only for payment of medical insurance premium but also for expense incurred on treatment. It is applicable form 1st April 2018.
Deduction allowed under section 80D for payment of medical insurance premium is Rs. 25,000 for non-senior citizens. However, this deduction increases to Rs. 50,000 for senior citizens. You can also read Tax deduction for payment of medical insurance premium. Check Government has come out with new Pension Scheme
Non-deduction of TDS on Interest
There is TDS (tax deduction at source) for all kind of income. However, to give relief to super senior citizens Budget 2018 has raised limit for TDS from Rs. 10,000 to Rs. 50,000. So, this TDS will applicable for senior citizens if annual interest income from bank or post office is more than Rs. 50,000.
In case total income is exempted from income tax levy and nil tax is payable by senior citizen for financial year then submit Form 15H for non-deduction of TDS on Interest on Fixed Deposit. Also, TDS shall not require to be deducted on such income, under section 194A. Read Also Read: All about Senior Citizens’ Savings Scheme
Deduction for medical treatment of critical illnesses u/s 80DB
Under section 80DB provides deduction for medical treatment of specified critical illnesses. Now, this has been increased to Rs. 1 Lakh for both senior and super senior citizens with effect from FY 2018-19. Earlier limit was Rs. 60,000 for senior citizens and Rs 80,000 for super- senior citizens. Following illness are covered under section 80DDB:
- Neurological Diseases
- Parkinson’s Disease
- Malignant Cancers
- Chronic Renal failure
Normal deduction for Pensioners
Budget 2018 has set standard deduction of Rs 40,000 for both salaried and pensioners. For Salaried this is not much useful as medical reimbursement and transport allowance have been put an end to. But as pensioners did not have these allowances, Rs 40,000 is straight deduction for them. Also Read Best Interest Rate on Bank Fixed Deposits.