The Union Budget 2023, which is expected to be the final full-year budget before the 2024 general elections, is anticipated to offer a range of tax perks on February 1. Some of the requests from individual taxpayers include the following:
- An increase in the basic exemption limits and a Section 80C ceiling of Rs 1.5 lakh
- A simpler capital gains tax structure
- Sops for the housing sector
- Additional tax reliefs under the new tax regime
One specific request from taxpayers is to raise the basic exemption threshold for senior citizens (Aged>60) from Rs 3 lacs to Rs 5 lacs, which is the same as the threshold for very senior citizens (over the age of 80). This would mean that this amount of revenue would not be subject to taxation.
Financial experts also have additional suggestions for the finance minister to consider in the 2017 budget.
Allow all taxpayers to do medical expenses deductions under 80D
Senior citizens who acquire health insurance policies can receive tax deductions of up to Rs 50,000 on premiums paid under Section 80D. This deduction is available if their children pay premiums on their behalf.
Tax rules also provide some benefits for senior citizens who do not have health insurance. They are eligible for a Rs 50,000 medical expenses deduction of 80D paid during the fiscal year.
Aside from that, standard health insurance policies that do not cover outpatient department (OPD) charges do not reimburse ordinary medical expenses, including pharmacy bills, doctor consultation fees, and diagnostic tests. The finance minister may consider allowing this as a deduction regardless of whether or not they are covered by health insurance policies.
Many senior individuals have chronic illnesses, such as diabetes and hypertension, that necessitate ongoing monitoring and medication.
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Increase the medical expenses deductions 80D to the maximum for paid health insurance premiums
This desire has grown in popularity, particularly since COVID-19. Health insurance prices have risen in the aftermath of the pandemic, and many people have voluntarily increased their coverage.
If a senior citizen and their spouse want good, complete coverage, the premium sum may exceed Rs 50,000. The finance minister should consider extending medical expenses deductions 80D exemption limit to Rs 1 lakh.
Increase the deduction for savings and FD interest to Rs 1 lakh
Section 80TTB allows senior individuals to deduct up to Rs 50,000 in tax on any interest earned on bank and Post Office savings fixed deposits (FDs). Given rising inflation and their limited sources of income, this cap should be increased to Rs 1 lakh.
Allow pension income to be tax-free
This has long been a request, not only from senior citizens but also from life insurance firms. Currently, seniors’ annuity or pension income generated from their retirement corpus acquired over time is taxed.
This applies to annuities purchased through the National Pension System (NPS) fund as well as pension policies issued by life insurers. The full pension that retirees get, principal and interest, is taxed. Senior folks would like to see their demand to exempt at least the primary component from tax addressed in Budget 2023.
A new, dedicated fixed-income instrument for senior citizens
Home loan borrowers may be feeling the pinch of increased interest rates as a result of the Reserve Bank of India’s (RBI) repo rate hikes, but depositors are smiling.
Fixed deposits, for example, provide excellent returns to senior citizens. However, interest rates are volatile, and the cycle may change. At the moment, the only specific fixed-income instruments available are the senior citizens saving scheme (SCSS) as well as the Pradhan Mantri Vaya Vandana Yojana (PMVVY). They would prefer a similar special product with a minimum fixed rate of, say, 7.5 percent and a maximum investment threshold of more than Rs 15 lakh.
Make the tax return and refund procedure easier
Tax experts believe that the process of getting a tax refund for senior individuals who do not have taxable income should be simplified. Given the expanded use of technology and data at the Income Tax Department’s disposal, this is conceivable.
Section 194P exempts elderly persons over the age of 75 from submitting income tax returns if they solely receive a pension and interest income from the same specified bank to which the pension is credited. The scope of the benefit could be broadened to include people above the age of 60.
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