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Retired and saving? CBDT's new guide helps you maximise tax benefits

For many Indians, retirement marks the beginning of a quieter life, but it doesn't mean stepping away from financial responsibilities. Fortunately, the Income Tax Department has rolled out a series of benefits that make post-retirement tax planning easier and more rewarding. From higher exemption limits to tax-free retirement payouts, here's a breakdown of the key tax reliefs available exclusively to retired employees, according to the latest official document released by the Central Board of Direct Taxes (CBDT). Higher exemption limits for senior and super senior citizens Senior citizens (aged 60–80) get a higher basic exemption limit of Rs 3 lakh, compared to Rs 2.5 lakh for others. For those above 80, or 'super senior citizens', the tax-free slab goes up to Rs 5 lakh. These enhanced limits significantly reduce taxable income in the golden years. Pension and retirement payouts: What's tax-free? Several common retirement payouts are exempt from income tax, such as: · Gratuity: Fully or partially exempt under Section 10 (10), depending on the nature of employment. · Commuted pension: Tax-free under specified conditions as per Section 10 (10A). · Leave encashment: Exempt up to specified limits under Section 10 (10AA). · Provident fund & superannuation: Amounts received from recognised funds are also exempt under Sections 10 (11), 10 (12), and 10 (13). Standard deduction and no advance tax hassle Retired employees receiving pension can avail a standard deduction of Rs 50,000. Moreover, senior citizens with no business income are exempt from paying advance tax, easing compliance. Medical and interest income deductions Healthcare expenses tend to rise post-retirement, and the tax law acknowledges that: · Rs 50,000 deduction under Section 80D for health insurance premium or medical expenses. · Rs 1 lakh deduction under Section 80DDB for treatment of specified diseases. · Up to Rs 50,000 deduction under Section 80TTB for interest income from banks, post office, or cooperative banks. No TDS is deducted if interest income is below Rs 50,000 in a year. Special provisions and filing relaxations · Under the Reverse Mortgage Scheme, the amount received is not treated as capital gains. · Very senior citizens (80+) can file returns manually if their income exceeds Rs 5 lakh or refund is due. · From AY 2022–23, citizens aged 75+ with only pension and interest income (from the same bank) are exempt from filing ITR, banks will compute and deduct the applicable tax.