Budget 2018: In a move that would help senior citizens, the 2018 Union Budget has announced various incentives like tax exemption of interest income from deposits with banks and raising the limit of deduction for health insurance premium. The most important announcement for senior citizens was extension of Pradhan Mantri Vaya Vandana Yojana (PMVVY) up to March, 2020. Finance minister Arun Jaitley in his Budget speech said, “In addition to tax concessions, I propose to extend the PMVVY up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India (LIC). The existing limit on investment of Rs 7.5 lakh per senior citizen under this scheme is also being enhanced to Rs 15 lakh.” PMVVY is a pension scheme exclusively for senior citizens. The scheme was launched on May 4, 2017 for the period of one year, but now it has been extended by another two years. Suresh Sadagopan, founder, Ladder7 Financial Advisories said that, “The only people who have benefited from the Budget are senior citizens. The extension of PMVVY and increasing the amount to Rs 15 lakh is a positive move.
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There are not too many options available for senior citizens as fixed deposits are giving 6.5-7% returns and PMVVY with 8% return is a very good option.” A new Section 80TTB has been proposed to be introduced for exemption of interest income of senior citizens up to Rs 50,000 on deposits with banks and post offices and no TDS shall be required to be deducted on such income, under Section 194A. However, no deduction of interest income under Section 80TTA shall be allowed in these cases. Under Section 80D, all senior citizens will now be able to claim deduction up to Rs 50,000 in respect of health insurance premium and very senior citizens for medical expenditure incurred. Earlier, the limit was Rs 30,000.
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“This means an additional Rs 20,000-35,000 can be favourably looked at for allocating to health insurance premiums. India still looks at tax benefits for insurance premium payments,” said Joydeep K Roy, Partner & Leader – Insurance, PwC India. Limit of deduction for medical expenditure for certain critical illnesses has been increased to Rs 1 lakh for senior citizens, under Section 80DDB. These concessions to senior citizens will add up to Rs 4,000 crore.