Ask any one, what do you mean by ‘senior citizen' for income-tax purpose? For a split second he will hesitate to answer you and if he does not, then you can be sure that he has not seen closely the fine print of the Finance Act, 2011.

The Finance Minister while presenting the Budget 2011 declared that the age for ‘senior citizen' for availing enhanced basic exemption limit would be reduced from 65 to 60 years. Whether the age of 60 years meant for ‘senior citizen' is to be adopted for all purposes under the Income-Tax law is debatable, for many reasons. Firstly, there is no definition of the term ‘senior citizen' in Section 2 of the Income-tax Act.

The Part III of the First Schedule to the Finance Act, 2011 dealing with tax slabs and rates applicable for individual taxpayers covers those aged above 60 years in addition to a new category introduced viz. ‘very senior citizen' being the persons aged 80 years or more during the previous year.

The term ‘senior citizen' is explained in various provisions by making reference to 65 years, instead of 60 years even after the introduction of the Finance Act, 2011. Corresponding amendments were not made out to those provisions which imply that what is stated in the Budget speech is meant only for computing tax liability on total income, and not for other benefits or concessions contained in the Act.

Section 80D providing deduction in respect of health insurance premium at the enhanced quantum of Rs 20,000 is applicable only if the individual has completed 65 years at any time during the financial year. The age limit of 60 years thus could not be applied for this purpose. Similarly, section 80DDB meant for expenditure towards medical treatment of prescribed diseases allowing higher deduction to the extent of Rs 60,000 will be applicable only if the senior citizen has completed 65 years during the year, and not the new age limit of 60 years as the Section is not amended correspondingly.

Accidental or intentional?

Since the term ‘senior citizen' is not defined in Section 2 and Explanation to Section 80D and Section 80DDB continue to make reference to 65 years for allowance of enhanced deduction, taxpayers have to keep in mind that the term ‘senior citizen' has more than one meaning as of now. The differential treatment would affect only those who have completed 60 years, but not completed 65 years. Is the omission to amend sections 80D and 80DDB is accidental or intentional could not be answered with certainty. However, taking note of the recent apex court decision in Ajmera Housing Corporation v. CIT (326 ITR642(SC)), the differential meaning has to be adopted and applied, though it is a discomfort to a particular class of taxpayers.

(The author is an Erode-based chartered accountant.)

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