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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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