The tax liability for senior citizens go up when they become non-resident Indians. Here's how...
Sanjeev Singh, 70, has been staying with his children abroad for the last few years. In fact last year, he spent almost 10 months with his sons based in the US and UK. As a result, he became a non-resident Indian for tax purposes in India. Recently, when he visited India to file his tax returns, he was surprised to find that his tax liability had gone up Rs 12,000. More interesting was the fact that, while his income had remained similar, the tax amount had risen from zero to Rs 12,000.
Surprised with this new development, he decided to approach a chartered accountant for an explanation. Fresh calculations revealed that the numbers were correct. The key point in the entire process was that the senior citizen benefit was not available for Singh, even though he was above the required 65 years of age.
According to the Income Tax Act, there are two main benefits available for senior citizens. First, a higher exemption limit of Rs 1,95,000 for someone who has crossed 65 years. Also, there is a higher deduction of Rs 20,000 available for payment of premium for a medical or a health insurance policy.
But both these apply to resident Indians only. There are some who become non-resident for a small time period