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, in the Budget 2018, several changes have been introduced to improve the horizontal equity of the tax system by providing relief to certain section of the society, in particular, senior citizens, keeping in view their personal circumstances like health, fixed source of income, etc. The proposed changes will be effective from the previous year 2018-19 relevant to the assessment year 2019-20. These changes are discussed in the following paragraphs.
Deductions available to senior citizens in respect of health insurance premium and medical treatment
Section 80D, inter-alia, provides that a deduction upto ₹ 30,000/- shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citzen. It is proposed to raise this monetary limit of deduction from ₹ 30,000/- to ₹ 50,000/-.
In case of single premium health insurance policies having cover of more than one year, it is also proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.
Enhanced deduction to senior citizens for medical treatment of specified diseases
Section 80DDB of the Act, inter-alia, provide that a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto ₹ 80,000/- and in case of senior citizens upto ₹ 60,000/- subject to specified conditions. It is proposed to raise this monetary limit of deduction to ₹ 1,00,000/- for both senior citizens and very senior citizens
Deduction in respect of interest income to senior citizen
At present, a deduction upto ₹ 10,000/- is allowed u/s 80TTA to an assessee in respect of interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction u/s 80TTA shall be allowed in these cases.
Consequently, threshold for deduction of tax at source on interest income for senior citizens u/s 194A shall also be raised from ₹ 10,000/- to ₹ 50,000/-.
Increase in limit of investment in Pradhan Mantri Vaya Vandana Yojana
It is also proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of ₹ 7.5 lakh per senior citizen under this scheme is also being enhanced to ₹ 15 lakh.
Due to aforesaid proposals, good amount of money will be retained in hands of senior citizens (might be not beneficial to all). Steps of Hon’ble Finance Minister in this regard is welcome.