Similar to senior citizens as per Income tax Act, very senior citizens who as per persons aged between 60 and 80 years are entitled to some income tax benefits. These are as below:
1. Tax Exemption allowed:
For non-senior citizens the exemption limit is Rs. 2.5 lakh i.e. they are not required to file their return if their annual gross income is equal to or below Rs. 2.5 lakh. For very senior citizens, the limit is however decided at Rs. 5 lakh.
2. No compulsion to pay off advance tax:
Under Section 207 of the Income Tax Act, senior citizens are not required to pay advance tax in case they estimate their tax liability to be more than Rs. 10000 in a fiscal year which is other wise a requirement for non-senior taxpayers as per Section 208.
3. No compulsion to e-file return
If senior citizens are filing their return of income in Form 1 or 4 there is no compulsion to file return of income or ITR electronically as they are not tech-savvy.
4. Allowed standard deduction on pension income:
Such taxpayer category is allowed a standard deduction of Rs. 50000 on their pension income.
5. No tax implication on reverse mortgage:
Any of the accommodation can be reverse mortgaged by senior citizens for monthly income source and ownership shall also remain with them. And for the same they are given monthly payments.
6. Tax Deduction benefits:
Medical insurance benefit under section 80D:
Premium upto Rs. 50000 in a year by a senior citizen can be claimed as deduction under the section specified above. And if they are paying premium on behalf of their parents who are also senior citizens, maximum deduction allowed is Rs. 1 lakh.
Interest up to Rs. 50000 qualifies for rebated under section 80TTB
Interest on savings account and fixed deposits taken together up to Rs. 50000 is eligible for deduction. And this limit for individual banks.
Also expense incurred up to Rs. 1 lakh in a year on medical treatment can be claimed as deduction under section 80DDB.