In a bid to support the financial well-being of senior citizens in India, the government has introduced a range of income tax benefits specifically tailored for individuals aged 60 years and above. These benefits include advance tax payments, standard deductions, medical insurance premiums, and interest earned from bank and post office deposits.
Under the previous tax regime, senior citizens were granted an exemption limit of Rs. 3 lahks, while super senior citizens (aged 80 years and above) enjoyed a higher exemption limit of Rs. 5 lakh. However, the new tax regime does not differentiate between senior and super-senior citizens, as both categories now receive a basic exemption limit of Rs. 2.5 lakh, similar to regular taxpayers.
One notable provision for tax benefits is outlined in Section 80D of the Income Tax Act, which allows individuals to claim deductions for the cost of purchasing health or critical illness insurance. Generally, the maximum deduction under this section is Rs. 25,000 for oneself, spouse, and dependent children. However, if one or both parents are senior citizens, the maximum deduction allowed is increased to Rs. 50,000.
To qualify as a senior citizen for these benefits, an individual must be a resident of India and be 60 years of age or older. Non-resident Indians are not eligible for these specific tax advantages.
Section 80D of the Income Tax Act provides an avenue for all individuals or Hindu Undivided Families (HUFs) to claim deductions from their total income for medical insurance premiums paid during the fiscal year. This deduction extends to top-up health plans and critical illness plans as well. The deduction benefits encompass health insurance plans for oneself and premiums paid for policies covering a spouse, dependent children, or parents.
Archit Gupta, the Founder and CEO of Clear, stated, “Senior citizens enjoy all the tax benefits available to non-senior taxpayers. Additionally, where senior citizens opt for the old regime, they can get a higher basic exemption limit – Rs. 3 lahks for those between 60-80 years and Rs. 5 lakh for those above 80 years of age.”
Furthermore, if senior citizen pays premiums for themselves and their family members, including parents above 60 years of age, they are eligible to claim deductions of up to Rs. 1 lakh under Section 80D. Additionally, Section 80D allows the policyholder to claim tax benefits of up to Rs. 25,000 for preventive health check-ups, which is inclusive within the overall limit of Rs. 2.25 lakh or Rs. 2.5 lakh.
These tax benefits aim to alleviate the financial burden on senior citizens and encourage them to invest in health insurance for themselves and their loved ones. By recognizing the unique needs of this demographic, the government strives to promote their overall well-being and financial security.