Senior citizens, just like salaried taxpayers and the general public, are eagerly anticipating the Union Budget 2024 with optimism. The challenges posed by high inflation and increasing living costs, coupled with limited income, have significantly impacted their quality of life.

It is important to recognize that many senior citizens rely on fixed income investments or rental income to sustain their financial needs, making them in need of additional financial assistance and guidance compared to other age demographics.

Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG in India, says, “As per statistics, more that 10 percent of India’s population are senior citizens aged 60 years and above. Also, with the focus of the government on senior citizens with the schemes like the Pradhan Mantri Vaya Vandana Yojana, Ayushman Bharat etc. as part of its 100-day agenda, some changes can be expected in the upcoming budget for this category of individuals from a tax standpoint.”

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Some of the changes that senior citizens can expect from the Budget 2024 are mentioned below:

1. Increase in Standard Deduction

The current limit for standard deduction under both the new and old tax regime is Rs 50,000. In most cases, senior citizens avail this deduction against the pension income that they earn. Considering the ever-increasing cost of living, it would be prudent to evaluate enhancing this deduction limit to Rs 1 lakh at least.

2. Increase in the Limit for Deduction under Section 80TTB

Currently, the deduction under Section 80TTB for a resident senior citizen on account of interest earned on bank deposits, post office deposits etc. is capped at Rs 50,000. “Given that the majority of senior citizens invest in bank deposits considering it to be a secured mode of investment for their future, the deduction limit may be increased to Rs 1 lakh. Also, this deduction may be allowed even under the New Tax Regime,” says Sirwalla.

3. Tax Deduction on House Rent

An additional important anticipation involves the implementation of a tax deduction for elderly individuals who are not receiving regular pensions and are renting a house. This measure has the potential to ease the financial strain on senior citizens living in rented homes, providing them with essential relief and stability in their housing costs, according to CAclubindia.

4. Increase in Health Insurance Premium Deductions

There is speculation that the government may raise the deductions on health insurance premiums for senior citizens, with the current limit of Rs 50,000 potentially being increased to at least Rs 1 lakh. This adjustment is intended to address the increasing healthcare costs and enhance seniors’ access to medical care, ensuring they have the necessary support to maintain their health and well-being.

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5. Increase in LTCG Tax Exemption Limit

As per Caclubindia, the government is expected to raise the long-term capital gains (LTCG) tax exemption limit for senior citizens from Rs 1 lakh to at least Rs 2 lakh. This potential change is expected to offer senior citizens more financial flexibility and increased tax relief on capital gains, which could in turn promote continued investment in financial markets.

Apart from these, senior citizens are also looking forward to a raise in the tax exemption thresholds for both the old and new tax systems, as well as tax-free pensions from NPS, EPS, and other sources. Additionally, they seek the rationalization of Section 194P to extend the age limit for senior citizens to be exempt from filing income tax returns over 75 years.

Senior citizens, thus, eagerly anticipate measures that will enhance their comfort, particularly in today’s fast-paced world. This could include deadline extensions, adjusted timelines, or special provisions for income tax deductions, filing, or rebates. Any such announcements made by the government would result in senior citizens having more disposable income in the face of increasing inflation.