TAX : SENIOR CITIZEN

My grandfather is a senior citizen. He want to know the benefits available to senior citizen under the Income Tax Act?

Under the Income Tax Act, a senior citizen is a person who at any time during the previous year has attained the age of 65 years or more. There are certain benefits available to senior citizen under the Income Tax Act:-

(i) Tax rebate u/s 88B: Rebate under this section to the extent of Rs.20,000/- was available to all senior citizens whether they are pensioners or self employed or traders etc.

It may be noted that no rebate u/s 88B is available from A.Y.2006-07 onwards. However, the maximum amount not chargeable to tax in respect of senior citizens has been increased to Rs.2,40,000 w.e.f. A.Y. 2010-11. Thus, no tax is payable by a senior citizen if the total income is upto Rs.2.4 lacs for the A.Y. 2010-11.

(ii)           Benefits provided by Finance Act 2007: The deduction available u/s 80D for medical insurance premium paid is to be increased to Rs.20,000 for senior citizens. Secondly, the deduction available u/s 80DDB in respect of expenditure incurred on treatment of specified diseases is to be increased to Rs.60,000 for senior citizens.

(iii)          In order to resolve the tax issues arising out of the reverse mortgage scheme introduced by the National Housing Bank (NHB), the Finance Act 2008 has added a new clause (xvi) in Section 47 of the I.T. Act which provides that any transfer of a capital asset in a transaction of reverse mortgage under a notified scheme shall not be regarded as a transfer and shall, therefore, not attract capital gains tax. This ensures that the intention of a reverse mortgage which is to secure a stream of cash flow against the mortgage is not contradicted by treating the same as transfer