India is the second most populated country in the world after China with an approximate population of 1.39 billion. Out of this, approximately 10.36% are aged 60 years or above i.e. ~ 144 million constituting a substantial part of the Indian demography and thus significantly driving the growth of the country.
Many of these senior citizens do generate income (mostly passive in nature). However, considering their contribution even after the age of 60 and the increasing cost of living, it seems that the current tax incentives available to such individuals are not adequate. Through this article, we aim to put together some of their expectations from the upcoming Union Budget 2023.
- Enhancing the limit of section 80C:
Deduction u/s 80C of the IT Act is an umbrella wherein majority of the savings/investments based deductions such as Deposit in Senior Citizen Savings Scheme (‘SCSS’) as per SCSS Rules, 2019, Contribution in 5 years Term Deposits, LIC, PPF, Subscription in National Savings Certificate (‘NSC’) etc. The maximum deduction that an individual can claim is restricted to Rs. 1,50,000 only which is very less considering the number of savings/investments based deductions opportunities available under this section. Hence, the said limits are expected to be revised upwards as it was last revised in the 2014 Budget. Alternatively, for senior citizens of 60 years or above, an additional limit of deduction of Rs. 50,000 in addition to Rs. 150,000 u/s 80C is expected.
- Lock-in Period of holding for specified investments u/s 80C be rationalized for senior citizens
Certain investments such as fixed deposits with banks or post offices, NSC, Equity Linked Savings Scheme (‘ELSS’) are eligible for deduction u/s 80C subject to the specified lock in periods ranging from 3 (for ELSS) to 5 years (for NSC and fixed deposits). Many senior citizens might be in the need of liquid cash for their physical wellbeing, medical care or for other exigencies. Thus, it is expected that the said lock-in timelines would be revised and rationalized for senior citizens.
- Increase in the threshold limit for sec 80TTB and widening the scope to include interest from NSC
Section 80TTB of the IT Act provides every senior citizen, a deduction for an income which is in the nature of interest on deposits with a specified banking company or a co-operative society engaged in the business of banking or a Post Office of upto Rs. 50,000 in a particular Financial Year. However, the said limit has not been enhanced from last 5 years and needs correction as per present rate of inflation. As such, it is expected that the limit of Rs. 50,000 be increased to Rs. 75,000.
Also, interest income on NSC is one of the primary sources of income for many senior citizens and thus it should be included within the scope of 80TTB.
- Increasing the threshold for Mediclaim Premium for Senior citizens
In wake of the global medical concerns arising from the covid spread, other lifestyle and health issues, it is seen that senior citizens are the greatest sufferers in this situation. Resultantly, this has led to a steep rise in the medical expenditure as well as health insurance or mediclaim premiums. The present provisions provide for a deduction of Rs. 50,000 u/s 80D with respect to any mediclaim premium/ medical expenditure incurred by a senior citizen. Thus, it is expected that the said threshold limit be increased to Rs. 1,00,000.
- Reducing the age limit for senior citizens u/s 194P to 60 years
Section 194P of the IT Act provides for exempting Senior Citizens from filing income tax returns aged 75 years and above subject to certain specified conditions:
- Senior Citizen should be of age 75 years or above
- Senior Citizen should be ‘Resident’ in the previous year
- Senior Citizen has pension income and interest income only & interest income accrued / earned from the same specified bank in which he is receiving his pension
Such benefit may be extended to senior citizens aged 65 years and above in order to avoid such senior citizens to face hardship in filing their returns.
- Enhancing the threshold limit for medical treatment of senior residents – Section 80DDB
Section 80DDB of the IT Act provides for deduction to a resident individual w.r.t. amount actually paid for the medical treatment of specified disease for assessee or a dependent relative (spouse, children, parents, brothers and sisters). The threshold limit for such deduction in case of senior citizen patient is Rs. 1,00,000. However, considering the fact that last revised was in Finance Act 2018 and the medical cost inflation in today’s date, the same needs an upward revision to Rs. 1,50,000.