Paying income tax* is our moral duty. The Government of India has planned infrastructure and development based on the income tax paid by individuals. However, when people grow older, they must make the right investments, such as an annuity plan to secure their future. It will help them lead a confident life without depending on others for their survival. Therefore, the government has introduced several tax* benefits in the form of deductions, exemptions, and other provisions for the benefit of super senior citizens to encourage them to invest better and provide financial assistance, considering their age and health complications.

If you have the relevant knowledge on these benefits, you can let the super senior citizens in your family make the best use of it all. So, here is a detail about it, and let's get started!

Tax Benefits for Super Senior Citizens

Tax benefits vary slightly in the different provisions stated for the senior citizens and the super senior citizens. Senior citizens are individuals between 60 and 80 years of age, and super senior citizens are older than 80. Here are the tax benefits details for the super senior citizens:

1. Income Tax slab rate - According to Budget 2020-21, senior citizens above 75 years of age are exempt from filing ITR if the only source of their income is pension and interest income. And, if there is an additional income, super senior citizens can also opt for the previous or the new tax regime based on their preferences. The new tax regime offers lesser rates and is the same for all the different types of taxpayers. And, according to the old regime, the following is the detail on the tax slab rate for the super senior citizens.
   
   

Income Tax Slab(₹)	Income Tax Slab Rates
Upto 5 Lakh	Nil
Between 5 Lakh and 10 Lakh	20%
Greater than 10 Lakh	30%

 

The stated income can be rental income from house property, capital gains, etc.,



2. Deduction on pension plans - If the super senior citizens have invested in an annuity policy such as the Tata AIA Smart Annuity Plan (UIN-110N150V05), they get a tax benefit for the premium amounts paid up to ₹1.5 Lakh per year. It is considered above the standard deduction of ₹50,000 on investments made in the National Pension Scheme. Therefore, investing in annuity insurance plans is considered beneficial considering the tax benefits apart from receiving the life cover and savings options.
   
   An annuity plan provides varied benefits to customise the plan based on customer preferences. There is the flexibility to choose between the immediate and deferred annuity solutions, choose the payout mode, increase the benefits using the top-up option, etc. Individuals can also get a guaranteed1 lifetime income to secure their financial future.
   
   

3. Tax Deduction for health insurance - Health insurance is an important financial product required to ensure the best treatment in an emergency when people grow old. Therefore, under section 80D, super senior citizens can get a deduction of up to ₹50,000 for health insurance premiums paid during the financial year. There is also the provision to avail ₹5,000 for expenses related to preventive health check-ups. It is also important to mention that the deduction on medical expenses is applicable even if there are no specific health insurance policies.
   
   

4. Exemption on advance tax - If the total calculated tax liability for a financial year is ₹10,000 or more, the individuals must pay the advance tax. It refers to the payment of income tax in advance instead of paying it lump sum towards the end of the financial year. There are defined due dates for the payment of installments. Super senior citizens do not have to pay advance tax unless the income is from a business or profession. They can file their tax based on the self-assessment tax.
   
   

5. Tax deduction for the treatment of specific illness - According to section 80DD, expenses incurred for a dependent for treating a disability can qualify for a tax deduction. The deduction is based on the extent of disability. The maximum limit can go up to ₹1.25 Lakh, and it is fixed. And, in case if the super senior citizens are suffering from a pre-specified disease, they can claim a deduction on the actual cost up to ₹1 Lakh. Also, under section 80U, if they have a disability or mental retardation, they can receive a deduction between ₹75,000 and ₹1.25 Lakh based on the severity of the illness.
   
   

6. Exemption on reverse mortgages scheme - The amount availed as a loan under the reverse mortgages scheme by a super senior citizen is not taxable. According to the scheme, the super senior citizen can mortgage and avail of EMIs for the value stated on a property. The EMI payment can be a source of regular income until death. When the super senior citizen dies, the authorities can sell the property to release and state the loan closed. This income tax benefit for super senior citizens is a great benefit for individuals holding ancestral property.

Conclusion

Income tax payment is an important obligation in every individual's life for the country’s development. However, considering the health conditions and financial stability requirement, the government has relaxed certain provisions to include valuable super senior citizen tax benefits. The most prominent are the revised income tax slab rate, tax deductions on annuity plans and health insurance schemes, tax exemption on advance tax, and reverse mortgage schemes. Therefore, you must encourage super senior citizens to invest in the right financial products to invest better and avail the best tax* benefits in the long term!

L&C/Advt/2022/Mar/0588