Budget 2023 expectations for Senior Citizens: Ahead of Union Budget 2023, experts are expecting big tax relief for taxpayers, especially senior citizens. While changes in Income Tax slab rates and an increase in Public Provident Fund (PPF) deposit limit are expected, some reports are also saying that the Union Budget 2023 may not offer much to individuals in terms of tax benefits and deductions.
The Financial Express has reported that currently, discussions are underway on whether to maintain the status quo on personal income tax rates. Meanwhile, the Institute of Chartered Accountants of India (ICAI), has recommended that the Government should provide relief to senior citizens by bringing the interest income from the National Savings Certificate (NSC) under the ambit of Section 80TTB.
Section 80TTB allows the deduction of up to Rs 50,000 of interest income from deposits made by senior citizens. ICAI believes bringing NSC under the ambit of Section 80TTB would benefit senior citizens as they mostly use this scheme for deposits.
The Finance Act 2018 had inserted a new section 80TTB to allow a deduction of up to Rs 50,000 in respect of interest income on deposits made by senior citizens. As per this section, a deduction of an amount up to Rs. 50,000 shall be allowed where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with a banking company, including cooperative banks and post office.
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Section 80TTB greatly benefits senior citizens whose primary source of income is generally interest income. In its Pre-Budget 2023 Memorandum, ICAI said NSC should be covered under Section 80TTB as this scheme is one of the main sources of income for many senior citizens.
“It is pertinent to mention that another main source of income for senior citizens is interest income on National Savings Certificate which can be purchased from Post Offices in India. In order to extend the benefit of provisions of section 80TTB to senior citizens, it is recommended that interest income arising to Senior Citizens on National savings Certificate may also be included within the ambit of section 80TTB,” ICAI said.
What ICAI recommended
“It is suggested that income by way of interest on National Savings Certificate also be included within the ambit of provisions of section 80TTB, so that senior citizens who have purchased NSCs from post offices are also able to avail the benefit of enhanced deduction under section 80TTB. It may also be considered to include dividend received from equity shares and mutual funds and share from cooperative society under the ambit of section 80TTB deduction to further enhance the intended benefit,” ICAI said.
The ICAI had made this suggestion of bringing NSC under the ambit of Section 80TTB ahead of Budget 2022 as well. However, the recommendation was not accepted.