Senior citizens - Special tax benefits! - Kotak Bank Taxes Stories in focus

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If you've crossed the age of 60, it's quite likely that you may have retired from your active job. The post-retirement stage of life can be a wonderful period of rediscovery. You finally have the time to do all the things you’ve always wanted to but could not, like spending time pursuing your hobbies, travelling the world, working on your business, or even simply indulging in routine self-care.

Along with all these transitions into the 60+ category, there's one more thing that you may look forward to - tax benefits for senior citizens.

Income Tax Benefits for Senior Citizens

The Income-tax Act, 1961 (hereafter referred to as 'the Act') has provisions dedicated to granting tax benefits to senior citizens over the age of 60 to reduce their tax liability as follows:

1. A higher basic exemption limit

The basic tax exemption limit is the limit up to which no tax is payable. For people aged below 60 years, the basic tax exemption limit under the old tax regime is just ₹2.5 lakh. However, senior citizens have a higher basic tax exemption limit, as follows:

₹3 lakh for senior citizens who are aged 60 years and above but are less than 80 years of age
₹5 lakh for super senior citizens who are aged 80 years and above

Let's examine how they compare with the tax slabs for non-senior citizens.

Income tax slab rate (FY 22-23)	For individual taxpayers below the age of 60	For individual taxpayers aged 60 years and above,but below 80 years	For individual taxpayers aged 80 years and above
Nil	Up to ₹2,50,000	Up to ₹3,00,000	Up to ₹5,00,000
5%	₹2,50,001 to ₹5,00,000	₹3,00,001 to ₹5,00,000	—
20%	₹5,00,001 to ₹10,00,000	₹5,00,001 to ₹10,00,000	₹5,00,001 to ₹10,00,000
30%	Above ₹10,00,000	Above ₹10,00,000	Above ₹10,00,000

2. Interest deductions under Section 80TTB

If you are a senior citizen, it is likely that you have a significant sum of money invested in bank fixed deposits so that you can earn a steady pay out of regular interest income. The good news is that this interest is tax deductible up to ₹50,000 under Section 80TTB of the Act.

In fact, in addition to interest on bank FD interest, interest on post office deposits, deposits held with co-operative societies (carrying on the business of banking), and interest on savings bank accounts are also eligible for deduction under this section.

3. Higher deductions under Section 80D

Typically, under this section, the health insurance premiums paid during the year are deductible up to ₹25,000 (if the policy is for yourself, your spouse, or dependent children). If you also pay health insurance premiums for your parents, whether they are dependent or not, you can claim an additional deduction for those costs up to ₹25,000.

However, if the person for whom the policy is purchased is a senior citizen, the deduction limit permissible is ₹50,000.

4. Exemption from advance tax liability

If you are a senior citizen with no income from business or profession, you are also exempt from paying advance tax during the year. You can directly meet your tax liability in the form of self-assessment tax, which you can pay before filing your income tax returns.

In case you need to pay any such self-assessment tax, you can use Kotak's internet banking portal (if you are a Kotak customer), or the Kotak payment gateway (if you are a customer of a different bank) on the e-filing portal. Whichever option you choose, you can be rest assured that the payment will be quick and easy.

Conclusion

Now that you know all these provisions about tax benefits for individuals over the age of 60, you can use this knowledge to reduce your tax liability if you are a senior citizen. Alternatively, if you know someone who belongs to this category of taxpayers, like your parents, grandparents, or your friendly neighbourhood aunt, why not help them save tax with these benefits?

This Article is for informational purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. ("Bank") or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers, and it does not constitute legal advice from the Bank. The Bank, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.