Budget 2018: The Union Budget 2018 is just around the corner and the common man is eagerly waiting to see what the government has in store for him.
Budget 2018: The Union Budget 2018 is just around the corner and the common man is eagerly waiting to see what the government has in store for him. Keeping in view the inflationary trends in the economy, it is vital to leave more disposable income in the hands of individuals, especially the old and the needy. The senior citizens thus desire that the exemption limit be raised considerably.
Extend 80TTA deduction on FDs
Senior citizens mainly invest in fixed deposits, Public Provident Funds, National Saving Certificates, etc.., but the decline in interest rates on these has adversely affected their finances. In order to provide relief to the elderly, the Budget could offer a minimum deduction from interest income on fixed deposits to senior citizens. Also, more instruments like low-risk hybrid mutual funds can be included under Section 80C deduction list. Additionally, the scope of Section 80TTA which presently provides for deduction of up to Rs 10,000 in respect of interest on savings account with banks, post offices, etc., could be enhanced to include interest on term deposits. Owing to increased life expectancy in India, reduction in the age limit for the category of ‘very senior citizens’ to 70 years and above, from 80 years would also be a decision in their favour.
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Increase 80DDB deduction limit
Section 80DDB provides that where a senior citizen pays an amount for the medical treatment of any disease for himself or dependent, then the assessee shall be allowed a deduction of Rs 60,000 or actual expenses, whichever is less. This limit is Rs 80,000 for very senior citizens. Considering the huge expenditure that requires to be incurred these days on medical treatment, these limits need significant revision.
Along the same lines, the limit for deduction of health insurance premium for a senior citizen under Section 80D also needs to be raised. Section 80D allows aggregate deduction of up to Rs 30,000 for senior citizens in respect of payment of health insurance premium. With the steep increase in the cost of medicines and routine medical check-ups, senior citizens seek enhancement of these limits.
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Income from rent
As per the provisions of Section 194-I, TDS @10% is required to be deducted, in respect of income by the way of rent for any use of land or building or furniture. The proviso to Section194-I further provides that no tax is required to be deducted in case the total rent paid in a financial year is less than Rs 1,80,000. Considering the general basic exemption limit for senior citizens of Rs 3 lakh, the present limit of Rs 1,80,000 is too low. If tax on his current year income is nil, the senior citizens need to make a declaration, in a prescribed form, to the assessing officer, seeking no deduction of TDS, leading to unnecessary compliance burden. Hence, senior citizens seek enhancement of this limit in their favour. The Senior Citizens Saving Scheme (SCSS) was introduced for individual of 60 years or more. TDS is deducted at source on interest if interest amount is more than Rs 10,000 per annum. Making interest payment monthly (instead of quarterly), and enhancing the limit for deduction of TDS will help senior citizens in times of falling interest rates and inflation.
The writer is managing partner, Nangia & Co LLP