Budget 2018-19 (yet to be enacted): Key Benefits For Senior Citizens
Senior citizens have plenty of reasons to cheer post the Union Budget. One of the biggest is the increase in deduction limit under Section 80D of the Income Tax Act.
Section 80D limit hike
Under this, you can avail tax benefits for paying your health insurance premiums and/or incurring medical expenses. For senior citizens, this limit has now been increased from Rs. 30,000 to Rs. 50,000.
A deduction is the first step to reducing your tax liability. It’s subtracted from your total income, and the balance is known as your taxable income. This change will be effective from the Financial Year 2018-2019. No changes have been proposed in this regard for people who are below 60 years of age. But you can benefit if you have parents who are senior citizens and if you pay premiums on their behalf. Under Section 80D, you can claim a deduction for health insurance bought for yourself, your spouse and your children. In addition to this, you can claim a further deduction for health policies bought in the name of your parents.
Essentially, if your parent is below 60 years, total deduction you can avail of is Rs. 25,000 for yourself, plus Rs. 25,000 for your parent, which equals Rs. 50,000. But if your parent is above 60 years, then you will be able to claim a deduction of Rs. 25,000, plus Rs. 50,000, taking the total deduction to Rs. 75,000.
That’s not all.
Section 80DDB limit hike
Apart from raising the deduction limit under Section 80D, the Budget also increased the deduction limit for medical expenses incurred during certain critical illnesses. For senior citizens (60 years and above, but less than 80 years), this limit was Rs. 60,000; and for very senior citizens (80 years and above) it was Rs. 80,000. Now this limit has been hiked to Rs. 1 lakh for all senior citizens under Section 80DDB of the Income Tax Act. For non-senior citizens, this deduction limit remains Rs 40,000.
Interest income exemption increased
The slew of benefits for senior citizens includes the increase in the exemption limit of interest income from banks and post office deposits. Interest income exemption on bank and post office deposits of Rs. 50,000 u/s 80TTB in lieu of exemption of Rs. 10,000 u/s 80 TTA. Additionally, TDS will not be deducted on such income under Section 194A. This benefit is also available for interest from all fixed deposit schemes and recurring deposit schemes.
Finally, the government has also proposed to extend the Pradhan Mantri Vaya Vandana Yojana—a pension scheme—up to March 2020. In addition, the investment limit per senior citizen will be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh.
Benefits such as the Section 80D, 80DDB deduction limit hike will certainly serve as an incentive for individuals who want to buy health plans for their parents, since extremely high premiums for senior citizens have been a deterrent—until now.
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