Tax Planning for Senior Citizens (A.Y. 2013-14 and A.Y. 2012-13)

Tax Planning for  Senior Citizens A.Y. 2013-14 and A.Y. 2012-13: The category of senior citizens has been under the purview of income tax from a very long time. However, there has been certain relief that has been provided to them when it comes to imposing taxes on their income. A person is regarded as a senior citizen if the person is above the age of 65 years. Some of the tax planning tips for senior citizens is as follows:

What is the maximum age of Senior Citizens?

The age limit for a senior citizen is 65 years or more for A.Y. 2012-13 and 60 years or more for A.Y.2013-14 to calculate deduction u/s 80D and u/s 80DDB. Also, for the purpose of furnishing a declaration in Form 15H, the age limit for a senior citzen is 65 years or more up to 30.06.2012 and 60 years or more w.e.f. 1.7.2012.

The new category i.e. very senior citizens has been created for A.Y. 2012-13 who has age more than 80 years. They can claim higher basic exemption limit for RS. 5,00,000.

Tax Planning Tips for Senior Citizens

Basic Limit

When it comes to determining the basic limit for computing tax liability, the senior citizen section enjoys a freedom upto Rs. 2, 50, 000 per year. Any income which is within the prescribed limit shall necessarily be exempted from the purview of taxation. A very senior citizens can claim up to Rs. 5,00,000.

Gifts and Investments

When people belonging to the senior citizen group want to gift certain objects or want to invest in some kind of investment policies, the same is also exempted from the purview of taxation. Additionally, the Senior Citizen’s Savings Scheme also offers about 9% interest rate per annum.

Investment in PPF

Public Provident Funds or the PPF are also very attractive source of investment for senior citizens as it allows an exemption upto Rs. 70, 000 for all citizens of India. Even if one has exhausted their own accounts, they can simply use their parents account to channelize more funds into the same section through investment by senior citizens.

Capital Gains

Capital Gains are also an exclusive area for senior citizens. The short term capital gains will be tax free if the basic threshold limit of 15% is not crossed.

Investment in health policies

Just like the benefits which accrue to the ordinary residents, even senior citizens are entitled to receive a deduction of Rs. 15, 000 when they invest in medical policies under the section 80 D. Additionally, they can also avail the opportunities for showing tuition fee expenses along with other forms of medical investment to further enhance their deduction section.

Apart from this, see articles on tax planning  and how to save tax?

• Tax Planning for Women Assessee (A.Y.2012-13 & A.Y.2013-14)
• Tax Saving Schemes 2012-13
• 15 Tax planning tips for all for A.Y.2012-13 and A.Y. 2013-14

Post Office Savings

It is also the best tax saving scheme for senior citizen’s tax planning. Post Office Savings can really be a cunning way out in a situation where a person has exhausted most of their available options. The scheme offers an interest rate of 8% per annum along with a 10% bonus after six years of maturity. The maximum permissible limit for investment is Rs. 3, 00, 000 for individuals and Rs. 6, 00, 000 for a joint account. Section 80L allows a tax free interest up to Rs. 12, 000 per annum in such respect.

There are also numerous other options for “Tax Planning for  Senior Citizens A.Y. 2013-14 and A.Y. 2012-13” that can be conceived and cleverly implemented such that the seniors can avail the maximum tax benefit and end up with as lesser tax liability as possible. But it should be remembered that no unfair means should be used while framing a valid tax planning session else the same case then might turn into a case of tax evasion. Make your decisions wise and thoughts wiser because after all whatever you pay to the Government in form of taxes are ultimately spend on your benefits and comfort.

On Income of Rs.5,20,000, senior citizens is not liable to pay tax for A.y. 2013-14

Yes it is true, if you are senior citizen then you don’t need to pay tax on income up to Rs.5,20,000. Follow the following guidelines.

1. Deduction can be claim up to Rs. 1,50,000 for housing loan (self occupied property)
2. deduction u/s 80 C of LIC, PPF and other tax saving schemes – 1,00,000/-
3. Deduction of medical insurance u/s 80 D – Rs. 20,000/-
4. Total deduction is equal to 270000/-

Income – Deduction i.e. 5,20,000 – 2,70,000 = 2,50,000 (Basic exemption), So tax will be NIL

If don’t have housing loan then senior citizen don’t need to pay tax on income of  Rs. 3,70,000/- after claiming deduction u/s 80C and 80D.

So, if you have any queries regarding “Tax Planning for  Senior Citizens A.Y. 2013-14 and A.Y. 2012-13″ then comment. We will reply as soon as possible.