Union Budget 2018 was looked at by every Indian with high expectations. The Modi government had to walk the talk of “Achhe Din” for the people of India. Senior citizens along with common man were expecting lot of measures for ease of living and the government tried its best to fulfill them.
Finance Minister Arun Jaitely began with below words when he announced Relief to senior citizen.
A life with dignity is a right of every individual in general, more so for the senior citizens. To care of those who cared for us is one of the highest honours. To further the objective of providing a dignified life, I propose….
Senior Citizens As per Income Tax Act
As per the Income Tax Act, 1961 any individual who attains the age of 60 years before the end of the financial year is qualified as a senior citizen of the country and any individual who attain the age of 80 years are considered as Very Senior Citizen.
Income Tax Benefits for Senior Citizens
Tax Exemption on Interest Income
Section 80TTA allowed an exemption of Rs. 10,000 on interest income earned by individuals on savings account with a bank, co-operative bank or a post office. This deduction excluded interest on fixed deposits, recurring deposits and other time deposits.
For senior citizens, the scope of the deduction has been extended to fixed deposits as well as recurring deposits. The limit of interest exemption is also raised to Rs. 50,000 for senior citizens. Interest income turns out as one of the major source of income for senior citizens with their lifetime savings therefore, this measure will help in reducing tax burden on the senior citizens by additional tax benefit of Rs. 2,000 to Rs. 12,000.
TDS will also not have to be deducted by the payer of the above interest income under section 194A of the Income Tax Act, 1961 therefore, interest income will not get blocked in form of tax refund with the department.
Standard Deduction on Pension Income
Standard deduction of flat Rs. 40,000 has been announced by the finance minister for salaried/pension employees. This will highly benefit pensioners with probable tax saving of upto Rs. 12,000 per annum.
Additional Mediclaim 80D Tax Benefit
Health insurance premium and/or medical expenditure is eligible for deduction from gross taxable income of any individual under section 80D of the Income Tax Act, 1961. Earlier the threshold for this section was kept at Rs. 30,000 per annum. The same has now been raised to Rs. 50,000 per annum. This enhancement, if fully utilized, will help in additional tax saving of Rs. 1000 – Rs. 6000 per annum.
Medical Expenditure on critical illness
Section 80DDB of the Income Tax Act, 1961 had a provision to allow tax benefit on medical expenditure incurred on critical illness treatment upto Rs. 60,000 by senior citizen and Rs. 80,000 for very senior citizen. These limits have now been merged to a common threshold of Rs. 1,00,000 in respect of all senior citizens.
Pradhan Mantri Vaya Vandana Yojana Benefit
Pradhan Mantri Vaya Vandana Yojana was announced for senior citizens. In this scheme senior citizen had a chance to deposit a lump-sump amount of savings in order to get fixed income. The tenure of the scheme with 8% interest has been extended upto March, 2020. Life Insurance Corporation is the fund Manager of the scheme. The existing investment limit of Rs. 7.5 lakh per annum has also been enhanced to Rs. 15 lakh. This will help in additional fixed interest income for senior citizens at a rate higher than bank fixed deposit rates.
Overall the Budget 2018 has been good for the senior citizens. The opening statement of the finance minister has been justified well with the measures as all these measures will help in increasing the tax saving. If every benefit is availed to its fullest then a tax saving of upto Rs. 25,000 per annum is possible.