ITR filing: How senior citizens can save tax; exemption limit details

New Delhi: Instead of waiting for the financial year to end, one should start financial planning from the beginning. A major source of income for senior citizens is the interest earned on their investments. It is important to know how much earnings from FD interest and other financial instruments is tax-free under the Income Tax Act if you are waiting to file their Income Tax Return (ITR). Here are some ways in senior citizens can reduce their tax liability.

5 Tax Saving schemes for better returns

Tax savings under Section 80TTA

Under Section 80TTA of the Income Tax Act, a person can claim deduction on interest earned on money kept in a bank’s savings account.
Tax exemption can be availed on interest received from savings accounts up to Rs 10,000 in a financial year.
This limit of deduction is not for each bank account. It is the total limit available on various investment made to banks, post offices and co-operative societies involved in banking business.
This includes the amount of interest received from deposits.
This deduction is for people below 60 years of age and HUF i.e. Hindu Undivided Family.
Time deposits such as FDs and recurring deposits are not covered under Section 80TTA.
If the interest earned on savings account exceeds Rs 10,000, tax will be levied on the amount exceeding Rs 10,000.
The taxpayer has to show the amount of interest received from all the savings accounts in a financial year in the ‘Income from Other Sources’ section in the ITR.
The interest amount remaining after deduction will be added to your earnings, on which tax will have to be paid as per the tax slab.

Tax savings under Section 80TTB

There is a special Section 80TTB in the Income Tax Act for senior citizens i.e. people aged 60 years and above.
Under Section 80TTB, senior citizens can claim a deduction of up to Rs 50,000 on interest earned from deposits in savings, FD and RD accounts.
This means that a senior citizen’s interest income up to Rs 50,000 remains out of the tax net.

Post Office Senior Citizen Scheme

Tax benefits on medical insurance and medical expenses

Under Section 80D of the Income Tax Act, senior citizens can avail a deduction of up to Rs 50,000 as premium for health insurance or medical insurance policy.
In the case of non-senior citizens, this limit is Rs 25,000.
Apart from this, under Section 80DDB of the Income Tax Act, medical deduction up to Rs 1 lakh can be claimed on the cost of treatment of certain diseases.
For other taxpayers, this limit is Rs 40,000.

 Income Tax Return Filing (ITR): Senior citizens can save tax by using deductions provided under multiple provisions of the Income Tax Act.  Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today