Budget 2019: Senior citizens need further tax relief from the FM; Here’s why

Updated: January 25, 2019 1:15:42 PM

Union Budget 2019 Expectations for Senior Citizens: It is time for the government to meet the expectations of the taxpayers and more importantly of senior citizens.

Budget 2019 Senior Citizen ExpectationsInterim Budget 2019: Increasing the deduction under Section 80C and widening the options for investment will encourage the senior citizen taxpayers to invest in various savings and other options.

The current government will present its last but Interim Budget 2019 in just a week’s time from now. People’s expectations of seeing some populist measures are obvious and also for the government, this is a very crucial milestone for the upcoming Lok Sabha elections.

This government in its last four full budgets have announced tax relief for salaried, middle class and senior citizens. This basically includes increase in slab rates, introduction of standard deduction for salaried and pensioner class, increase in limits of deduction under section 80C, 80D, etc. However, in the eyes of taxpayers, there have been no major tax reforms and these minor tax reliefs have not increased their disposable income in line with the increasing inflation rate. They have always felt unsatisfied every year post announcement of the budget. It is time for the government to meet the expectations of the taxpayers and more importantly of senior citizens.

Income Tax Benefits & Exemptions for Senior Citizens

With some major economic reforms, such as demonetization, GST, etc. the senior-citizen class has been facing hardship and, therefore, they are expecting some tax benefits to have financial security. This class is looking forward to some tax reliefs in this budget which will leave them with some more disposable income.

The age criterion to classify senior citizens and super senior citizens for tax slab rates, 60/80 years, was set eight years ago. This indeed needs a revisit. Lowering the age limit of super senior citizens to 70 or 75 years would be a welcome step. Further, for the last many years, the difference of tax exemption threshold between a senior citizen and an ordinary person is of Rs 50,000 (Rs 3 lakh and Rs 2.5 lakh, respectively) and the rest of slab tax rates are the same for both. The minor tax difference of Rs 5,000 on account of slab tax rates, in a real sense, is not giving any substantial benefits to senior citizens. These slab tax rates should be increased to Rs 3.5 lakh for senior citizens and Rs 6 lakh for super senior citizens to have some benefits in the era of increasing inflation and rising medical expenses. Alternatively, the government should merge the senior citizen and super senior citizen classifications and increase the tax exemption limit to Rs 4 lakh applicable to individuals aged 60 years or above.

Today, a senior citizen spends a significant amount of his income on his health and asking him for a contribution to build a corpus for nation’s health and education in form of health and education cess is ironical. They should be exempted from the health and education cess. The limit for deduction under Section 80D, for insurance medical expenses, should be further enhanced to Rs 1 lakh for senior citizens.

Last but not the least, increasing deduction under Section 80C from Rs 1.5 lakh to Rs 2 lakh and widening the options for investment will encourage the senior citizen taxpayers to invest in various savings and other options, which yield regular and steady income to meet their expenses.

The countdown has already started and hopes are building up. Whether this class will see any tangible benefits out of this budget, remains to be seen.

(By Sundeep Agarwal, Partner-Personal Tax, PwC India. Ritika Arora, Associate Director, PwC, also contributed to this article. The views expressed in this article are personal.)

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