Managing finances wisely becomes essential for senior citizens after their retirement sets in and regular income stops. The Income Tax Act, 1961, offers several deductions and benefits tailored for those aged 60 and above. But many elderly taxpayers end up paying more tax than necessary just because they are unaware of the exemptions they are entitled to.
As the income tax return (ITR) filing for FY 2024-25 (Assessment Year 2025-26) is here, let’s take a look at some deductions senior citizens often overlook while filing their ITRs.
Higher Basic Exemption Limit
Senior citizens (60 to 80 years) are eligible for a basic exemption limit of Rs 3 lakh under the old tax regime. Similarly, very senior citizens (80 years and above) enjoy a higher limit of Rs 5 lakh. This means income up to these limits is not taxable.
In addition, Section 194P of the Income Tax Act, which was introduced in 2021, brings some much-needed relief for senior citizens aged 75 years and above. If they meet specific conditions, they don’t have to go through the hassle of filing income tax returns — a move aimed at easing the compliance burden for elderly persons.
Section 80D: Medical Insurance Premiums
Under Section 80D of the Income Tax Act, senior citizens are eligible for a higher deduction of up to Rs 50,000 on health insurance premiums — double the limit available to younger taxpayers, who can claim up to Rs 25,000. Additionally, if a senior citizen doesn’t have health insurance but incurs medical expenses, they can still claim a deduction of up to Rs 5,000 for a preventive health checkup.
Section 80DDB: Treatment Of Specified Diseases
Senior citizens or super senior citizens diagnosed with certain specified illnesses like cancer, chronic kidney failure, AIDS, Thalassaemia, or Parkinson’s disease, among others, are eligible for tax deductions under Section 80DDB. They can claim up to Rs 1 lakh or the actual amount spent on treatment, whichever is lower. This deduction is applicable only if the treatment is supported by a prescription from a specialist doctor affiliated with a government hospital.
Interest Income Exemption: Section 80TTB
Senior citizens are eligible to claim a deduction of up to Rs 50,000 per year on interest income from fixed deposits, savings accounts and recurring deposits under Section 80TTB. However, many mistakenly quote only the Rs 10,000 limit specified under Section 80TTA, which applies to individuals and Hindu Undivided Families (HUFs) other than senior citizens. As a result, they often miss out on the higher deduction they are entitled to.
No Advance Tax Requirement
Senior citizens aged 60 or above who do not earn income from business or profession are not required to pay advance tax. However, senior citizens with business or professional income must still pay advance tax as per the applicable rules.
Form 15H For TDS Exemption
Senior citizens aged 60 years and above can submit Form 15H to prevent tax deducted at source (TDS) on interest earned from fixed deposits, recurring deposits, and other savings schemes. This benefit applies only if their total interest income for the financial year does not exceed the taxable limit. For senior citizens, the threshold for TDS exemption is ₹50,000 in interest income per financial year.
Retirement doesn’t mean an end to financial planning. In fact, it becomes even more critical. Senior citizens should be proactive in exploring all tax benefits available to them. Seeking advice from a tax consultant can help ensure that none of these valuable deductions are ignored.
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