Tax Saving Tips: Filing of Income Tax Return (ITR) is mandatory for all taxpayers in India, but it can seem like a complicated process for many people, especially senior citizens. Senior citizens depend on their pension and other income sources, so it becomes very important for them to understand the tax rules and take advantage of the available deductions and exemptions. With the right information and a little help, filing ITR can be easy.
Who is considered a senior citizen-
According to the Income Tax Act, 1961, persons aged 60 years or above are called senior citizens, while persons aged 80 years or above fall in the category of very senior citizens. Certain exemptions and benefits have been given in the tax rules for both, which may vary according to their age and income. Senior citizens can avail of tax exemption under 80TTB and 80TTA of the Income Tax Act. This exemption is available only when you choose the Old Tax Regime.
Section 80TTA: Exemption up to Rs 10,000-
This rule applies to individuals below 60 years of age and Hindu Undivided Families (HUF). You can avail of an income tax exemption of up to Rs 10,000 on interest earned from a savings account of a bank, post office, or co-operative society. This exemption is available only under the old tax regime and does not apply to interest earned from fixed or recurring deposits (RD).
Section 80TTB: Big relief for senior citizens-
Senior citizens above 60 years of age can avail an exemption of up to Rs 50,000 on interest earned from savings account, fixed deposit (FD), and recurring deposit under section 80TTB. This exemption applies to interest from a bank, post office, or co-operative bank. According to experts, senior citizens benefit more by staying in the old tax system, especially when their income depends on interest.
For example, if a senior citizen gets interest of Rs 60,000 from his fixed deposit, he can claim a deduction of Rs 50,000, and will have to pay tax only on Rs 10,000. This facility is also available only in the old tax regime.
No exemption in the new tax regime-
In the new tax regime, you do not get the benefit of exemption under section 80TTA and 80TTB. This means that if your income from interest is high, then the old tax regime may be more beneficial for you. Especially for retired persons, who mostly depend on interest for their income, more exemptions is available in the old regime.
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