The Union Budget 2018, unfolded a plethora of benefits for the senior citizens as our Finance Minister uttered these words, “A life with dignity is a right of every individual in general, more so for the senior citizens and to care for those who cared for us is one of the highest honours. To further the objective of providing a dignified life, I propose to announce the following benefits for senior citizens.” (Source: Budget Speech – Union Budget)
Yes, senior citizens have turned out to be the single largest beneficiaries of the tax incentives offered in the Union Budget 2018. The bouquet of benefits provided primarily for the retired people (who constitute around 9 percent of the total population) are proposed to affect their health protection and health insurance tax benefits positively.So, let’s see how Union Budget 2018 has brought relief for senior citizens:
Increased Benefits Under Section 80D
Under the section 80D, a person can avail the advantages for payment of health insurance premiums (as the premiums paid towards a health insurance policy qualify for tax deduction).
For senior citizens, the 2018 Union Budget has increased the deduction limit towards health insurance premium from Rs 30,000 to a maximum of Rs 50,000.This beneficial change for senior citizens would be applicable in the financial year 2019.
This change can also act as a tax saving option for individuals who invest in big health insurance plans for their parents. So, if you have parents as senior citizens and pay premiums on their behalf, under section 80D, you can easily ask a deduction for health insurance bought in the name of parents.
Increased limits under section 80 DDB
Other than increasing the deduction under section 80D, the Union Budget has also increased the limit of deduction for medical expenditure (under section 80DDB) in respect of specific critical illnesses like chronic renal failure, malignant cancers, thalassemia, and haemophilia.
According to the new provision, the deduction for the class of super senior citizen has been submerged into the senior citizen class. This means that there would be no distinction in the benefits to the senior and super senior citizens as follows:
- For senior citizens, limit is increased from Rs 60,000 to Rs 1,00,000
- For very senior citizens, limit is increased from Rs 80,000 to Rs 1,00,000
For non-senior citizens, this deduction limit is Rs 40,000.
With the rising medical inflation, the introduction of additional critical illness exemption (under section 80DDB) and the enhanced deduction of Rs 50,000 (under section 80D) will incentivize senior citizens and surely encourage them to buy a higher health insurance policy. Further, this would help them to take up the best medical insurance coverage to tackle the burden of medical emergencies.
Introduction of Section 80TTB
Senior citizens who are dependent on interest income from their fixed deposits and other debt instruments are also relieved with the increase in the tax-free limit on interest income.
This is because the exemption of interest income on deposits with banks (fixed deposits and recurring deposits) and post offices have been increased from Rs 10,000 to Rs 50,000 (by way of introduction of a new section 80 TTB).
No TDS on Interest Income
As per the new provision, TDS under section 194A shall not be deducted in case of senior citizens, if the interest does not exceed Rs 50,000. Earlier, this limit of TDS deduction was Rs 10,000.
Positive Changes in Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Pradhan Mantri Vaya Vandana Yojana scheme was launched in May 2017 by Life Insurance Corporation of India and is subsidized by the Government of India. This scheme allowed senior citizens to earn 8 percent interest and was earlier available till 3rd May 2018.
In this budget, the investment limit in the PMVVY scheme has been doubled to Rs 15 lakh, (which was initially 7.5 lakhs) and its tenure is being extended till March 2020. Such concessions were introduced to make life easier for elderly.
To conclude, we can say that budget 2018, has relieved over 4000 crore senior citizens from the taxation hassles through the above tax benefits. It is undoubtedly a welcome move by Modi Government and a smiling budget for senior citizens!!