You Can Claim Standard Deduction Of Rs. 50,000 On Pension
I retired from the private sector in the March 2023 and I am receiving pension from the Employees’ Provident Fund Organisation (EPFO). Can I claim standard deduction of Rs 50,000 on this pension?
All payments received by an employee by virtue of his/her employment, whether present or past, are taxed under the head ‘salary’. So the pension received from your ex-employer or from EPFO or even from the insurance company for superannuation policy bought by the employer, will be taxed under the head “salaries”.
So, any individual receiving such payment is entitled to claim standard deduction up to Rs. 50,000 against such income, provided it is taxed under the head salary. So, you will be able to claim the standard deduction up to Rs. 50,000 against pension received from EPFO. However, do note that this benefit is not available in respect of pension policies purchased by you directly from insurance companies.
My wife and I are resident senior citizen and do not have any medical insurance. My wife has incurred an expense of Rs. 18,000 on her dental treatment and has also spent another Rs. 21,000 on her cataract operation. She has also spent money on diabetes treatment. Can she claim deductions under Section 80D of the Income-tax Act, 1961 for these expenses?
If a senior citizen does not have any health insurance policy, then deduction in respect of such person can be claimed for any medical expenses, including those for daily medication up to Rs. 50,000, provided the payments have not been made in cash. Since she does not have any health insurance policy, she can claim all these expenses up to Rs. 50,000 under Section 80D. If the expenses incurred exceed Rs. 50,000, you can also claim the balance amount up to Rs. 50,000.
However, no deduction would be available to you as well if the payments have been made in cash. Cash payments are allowed only in respect of preventive health check-up charges up to Rs. 5,000 within the overall limit of Rs. 50,000 under Section 80D.
The accrued interest on my fixed deposits has crossed Rs. 50,000. The bank has deducted tax on the full amount. Isn’t there a threshold of Rs. 50,000 under Section 80TTB of the Income-tax Act, 1961?
What Section 80TTB provides for is the deduction that a senior citizen can claim in respect of interest received from bank and/or post office and cooperative banks up to Rs. 50,000 in a year. This is not to be considered while deducting the tax at source (TDS) on such interest income.
Though the threshold of TDS is Rs. 50,000 for senior citizens, banks are required to deduct tax on the entire amount once the interest amount exceeds this threshold of Rs. 50,000. In case the interest amount exceeds the threshold limit of Rs. 50,000, you can submit form 15 H to the bank in order to ensure that the bank does not deduct tax on your interest earning, provided your net tax liability for the year is nil.
The author is a tax and investment expert
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
