Senior citizens have some reasons to rejoice. Take a look at few changes introduced during Budget 2018 that will reduce the tax outgo from the hands of senior citizens in the country:
1. Interest on Savings Accounts / FDs: Senior Citizens in India generally save their money in Bank Savings Accounts. In Budget 2018, Income tax exemption on interest earned by senior citizens from savings accounts has been hiked to Rs 50,000 from FY2018-19. A new Section 80TTB has been proposed to be introduced for exemption of interest income of senior citizens up to Rs 50,000 on deposits with banks and post offices and no TDS shall be required to be deducted on such income, under Section 194A. However, no deduction of interest income under Section 80TTA shall be allowed in these cases.
2. Medical Treatment: With Health being the prime focus of Budget 2018, you can claim tax exemption up to Rs.1 Lakh (from existing Rs.60,000) for treatment of critical illnesses and certain diseases like chronic renal failure, malignant cancers, AIDS, etc.
3. Medical Insurance: Lastly, if you or your children buy a medical insurance cover for you, they can claim tax exemption up to Rs.50,000 now (from existing Rs.30,000). If the insurance cover is bought for more than a year, it will be divided proportionately for each year covered subject to the above limit.
4. Pradhan Mantri Vaya Vandana Yojana: The most important announcement for senior citizens was extension of Pradhan Mantri Vaya Vandana Yojana up to March, 2020. Under PMVVY an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of Rs.7.5 lakh per senior citizen under this scheme is also being enhanced to Rs 15 lakh. PMVVY is a pension scheme exclusively for senior citizens. The scheme was launched on May 4, 2017 for the period of one year, but now it has been extended by another two years.
Relief to Senior Citizens proposed:-
Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50,000.
TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes.
Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs. 30,000 to Rs. 50,000 under section 80D.
Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.
Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March, 2020. Current investment limit proposed to be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh per senior citizen.
Standard deduction of Rs 40,000 for pensioners