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The Finance Minister has done his bit to make the lives of citizens financially less burdensome. , What he did not give by way of income tax slab or rate concessions has been largely made good through fresh deductions to the tune of nearly ₹1.4-1.5 lakh. Effectively, a senior citizen (60 years and above) in the 30 per cent tax bracket would now be able to save up to ₹45,000(excluding cess) additionally in 2018-19, if she were to take all these benefits.
Higher deductions for interest income, increased limits for medical insurance premiums and treatments, and enhanced provisions for illnesses are set to put more money in the hands of all senior citizens, without distinction in age. Additionally, the investment limit in the Pradhan Mantri Vaya Vandana Yojana has been increased, which would mean higher pension amounts.
Interest savings
From just a deduction of ₹10,000 being allowed for savings bank interest under Section 80TTA, senior citizens are now allowed deduction up to ₹50,000. This enhanced deduction is applicable to all fixed and recurring deposits across banks and financial institutions.
The enhanced deduction limit would be available under a new section, 80TTB. Additionally, the TDS threshold on deposits would be increased from ₹10,000 to ₹50,000. The only caveat is that the ₹10,000 that was available for savings bank interest deduction would now not be allowed.
Incentive for medical care
Getting a medical insurance just got more lucrative as the deduction under section 80D has been increased from ₹30,000 to ₹50,000. Also, where premiums are paid for two years together (to get relatively cheaper rates), the amount can be split equally for both the years. For the treatment of certain specified illnesses, the deductions have been increased from ₹60,000 to ₹1 lakh.
Standard deduction introduced
As with the younger population, now senior citizens too would be allowed to deduct ₹40,000 from their taxable income. This will be in addition to their regular investment allowances and deductions. This move is expected to benefit pensioners who do not have the benefit of deductions on rent payment like normal working people do.
Increased investment limit
The Pradhan Mantri Vaya Vandana Yojana, a pension scheme for senior citizens, now has a higher investment limit of ₹15 lakh from ₹7.5 lakh earlier. This scheme has an assured 8 per cent return and will now be available till March 2020.
The maximum monthly pension that a senior citizen could currently get is ₹5,000. With the increased limit, she would now get ₹10,000 monthly.
Collectively, all these new deductions and allowances would result in an additional amount of ₹15,000-₹30,000 moving back into the pockets of senior citizens in the lower tax brackets.
Takeaways
Nearly ₹1.5 lakh in fresh deductions for seniors
Up to ₹45,000 savings for those paying 30 per cent tax
Standard deduction and higher limits in pension scheme
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