Tax Planning Opportunities under Senior citizens in India
Senior citizens and a very senior citizen are
granted a higher exemption limit as compared to normal tax payers. Exemption
limit is the quantum of income up to which a person is not liable to pay tax.
The exemption limit granted to senior citizen and very senior citizen for the
financial year 2016-17 is as follows
Senior Citizen (60-80 years)
A senior citizen is granted a higher exemption
limit compared to non-senior citizens (persons below the age of 60 years).
The exemption limit for the financial year 2016-17 available to a resident
senior citizen is Rs. 3,00,000. In other words, a resident senior citizen is
not liable to pay any tax up to income of Rs. 3,00,000. The exemption limit for
non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional
benefit of Rs. 50,000 in the form of higher exemption limit is available to a
resident senior citizen as compared to normal tax payers.
Very senior citizen or Super seniors (above 80
years)
A very senior citizen is granted a higher exemption
limit compared to others. The exemption limit for the financial year
2016-17 available to a resident very senior citizen is Rs. 5,00,000. In
other words, a resident very senior citizen is not liable to pay any tax up to
income of Rs. 5,00,000. The exemption limit for non-senior citizen is Rs.
2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000
in the form of higher exemption limit is available to a resident very senior
citizen as compared to normal tax payers.
Tax Planning Options Available
1) Life
insurance premium paid for self or spouse or any child of individual
2) Contributions
by an individual made under Employees' Provident Fund Scheme
3) Contribution
to Public Provident Fund Account in the name of individual or spouse or any
child of individual
4) Subscription
to notified savings certificates [National Savings Certificates (VIII Issue)]
5) Contribution
for participation in unit-linked Insurance Plan of UTI, in the name of
individual or spouse or any child of such individual
6) Contribution
to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989],
in the name of the individual, his spouse or any child of such individual
7) Tuition
fees (excluding development fees, donations, etc.) paid by an individual to any
university, college, school or other educational institution situated in India,
for full time education of any 2 of his/her children
8) Sum
paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New
Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan
of LIC) or other insurer
9) Subscription
to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI
(Equity Linked Saving Scheme, 2005)
10) Subscription to notified
bonds issued by the NABARD.
11) Deposit in an account
under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain
conditions)
12) 5-year term deposit in
an account under the Post Office Time Deposit Rules, 1981 (subject to certain
conditions)
13) Deduction up to Rs 30000
for any contributions made to the Central Government Health Scheme or LIC or
other insurer to effect or keep in force insurance on the health of a specified
person. Specified Person means, in case of Individual - self, spouse, dependent
children or parents.
14) Deduction upto Rs 75000
(Rs 125000 in case of severe disability) for the medical treatment of a
dependent who is a person with disability
15) Expenses actually paid
for medical treatment of specified diseases and ailments
16) Donations given to approved funds, trusts, etc.
17) Interest on loan taken for higher education
Specified Diseases and Ailments
Under section 80DDB we can claim the expenditure incurred on treatment
of specified ailments. There is a condition that no reimbursement from any
insurer should be there. If any such reimbursement is there, then it should be
adjusted with the expenditure incurred and only the balance can be claimed
under section 80DDB.
Amount of deduction shall be the lower of the following;
1) amount actually paid on medical treatment, or
2) if individual below 60 years - Rs 40000/-
if individual between 60-80 years - Rs 60000/-
if individual above 80 years -
Rs 80000/-
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