It has been seven months since Finance Minister Arun Jaitley announced the Union Budget for the Financial Year 2018-19; yet, some people are still clueless about the budget’s nuances. Hence, let’s talk about some of the important announcements Jaitley made that are expected to favour the elderly. Below are the key highlights of the Union Budget 2018-19 for the elderly.
TDS exemption limit raised to ₹50, 000
First things first, from an investor’s point of view, the hike in the exemption limit will add to the number of investments and boost investment in saving schemes such as PPF, FD, MIS and SIP. Plus, it is definitely going to help the elderly garner a larger surplus from their investment to use during their good old days.
As per the previous Income Tax Laws, an investor, irrespective of his/ her age; was liable to pay 10% of the income generated from their investment as TDS if the income exceeded the threshold which was ₹10, 000. Having said that, a 20% deduction was levied as TDS in case the PAN card details weren’t available with the bank. However, in the Union Budget 2018-19, the limit was raised to ₹50, 000. This means the income from deposit shall not be taxed unless the amount doesn’t exceed the mark of ₹50, 000. For the senior citizens who lack a source of income post retirement and whose gross annual income fails to qualify for a tax deduction as per the current tax limits, they can claim the amount deducted as TDS by filing self-assessment tax. In other words, if the income from investment exceeds ₹50, 000 but their gross annual income is less than ₹2.5 lakh, they can claim the TDS deduction by filing self-assessment tax.
Note: The TDS exemption limit is still the same for regular individuals i.e. people below 58 years of age. Their income from deposit shall be taxed like earlier if the income amount exceeds the mark of ₹10, 000.
Hike in deduction limit for health insurance premium
The deduction limit for health insurance premium which was just ₹30, 000 has been raised to ₹50, 000. The same will be applicable also for medical expenditure i.e. the expenses incurred by the elderly due to health problems can be claimed as a deduction from their gross annual income while filing the ITR. This deduction is allowed as per section 80D of the Indian Income Tax Laws.
In case of critical illness, the elderly will be eligible for a tax deduction up to ₹60, 000. The same deduction will be available up to ₹80,000 and in case of very senior citizens to ₹1 lakh for all senior citizens, under section 80DDB.
Increased the Pradhan Mantri Vaya Vandana Yojana
Arun Jaitley also proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March 2020. Prior to the Union Budget 2018-19, the limit was just ₹7.5 lakh for senior citizens. However, the current investment limit for the PMVV Yojana will be ₹15 lakh.