A TAX BONANZA FOR SENIOR CITIZENS
The Union budget this year introduced a slew of schemes to help senior citizens save more tax
The Union budget this year brought good news for senior citizens in the form of measures to help them save more tax. Here are the benefits at a glance.
MEDICAL INSURANCE PREMIUM
Change: The deduction limit for the premium has been raised from Rs 30,000 to Rs 50,000 per annum. Under Section 80D of the Income Tax Act, even medical expenditure can be claimed for benefits.
Conditions: The premium/ medical expenses shouldn’t have been paid in cash.
DEDUCTION FOR SPECIFIED DISEASES
Change: Under section 80DDB, the deduction of Rs 60,000-80,000 is proposed to be raised to Rs 1 lakh for senior citizens.
Conditions: The taxpayer should have spent on dependants. Any amount reimbursed by medical insurance is not eligible.
BANK/ POST OFFICE FD INTEREST
Change: A Rs 50,000 deduction is allowed on interest from bank/post office FDs.
Conditions: Deposits held by or on behalf of a partnership firm, association of persons or body of individuals are disallowed.
STANDARD DEDUCTION
Change: Pension would be eligible for the standard deduction of Rs 40,000.
Conditions: After standard deduction, the balance pension amount is taxable.
VAYA VANDANA YOJANA
Change: The Pradhan Mantri Vaya Vandana Yojana, offering 8 per cent return, has been extended up to March 2020. The investment limit has been doubled to Rs 15 lakh per person.
Condition: Only those above 60 years are eligible.
TAX ON EQUITIES
Change: Equities are now subject to 10 per cent longterm capital gains (LTCG) tax on gains exceeding Rs 1 lakh when held for more than a year. Are ULIPs, which don’t attract LTCG, a better option? “Go for the flexibility of ELSS (tax-saving) funds instead of marrying the fund manager for a long period under ULIPs,” says Vivek Rege, CEO, V.R. Wealth Advisors.
One would pay much more under ULIPs, including the entry cost of about 5 per cent, fund management charge of 1.35 per cent and exit charge in case of midterm surrender, adds Rege.