Caring for ageing India

By: Shahana MV

Sri. Arun Jaitley, the Finance Minister of India spoke in the budget speech 2018 regarding the importance of taking care of the weaker sections of the society. He said;

“A life with dignity is a right of every individual, in general, more so far the senior citizens. To care for those who cared for us one of the greatest honours.”

The relief and exemptions available to senior citizens introduced by the union budget 2018 are:

Section 80TTB- Exemption on interest income for Senior Citizens:

The population of Senior citizens mostly represent those who have retired from their service, or those who are barred by physical disabilities. The old age is an age where financial stringency increases, due to the sudden decrease in revenue, and a probable increase in several expenditures on medical, and other support needs. This emerges a need for easy generation of income, which is rather steady and mostly risk-free. Such financial urges lead them to safe investments like Bank deposits, mutual funds, renting shops and apartments etc.

An initiative to reduce the tax burden on such incomes is taken in the budget by granting exemption on interest income on bank deposits including term deposits, and post office deposits to the extent of ₹50,000. The present provision grants an exemption of 10000 on interest income from Savings Deposits for all citizens. This provision is now extended for senior citizens through intoducing a new section 80TTB. Further provisions related to TDS u/s 194A is exempted from such interests.

Section 80D- Medical Expenditure/Medical Insurance: 

Deduction on Health insurance premium and/or medical expenditure has been raised to ₹50,000 from the earlier limit of ₹30,000. In case of single premium health insurance policies covering more than a year, it is proposed that the deduction shall be allowed on a proportionate basis, subject to the specified monetary limit.

Currently, an amount of ₹25,000 per annum is allowed as a deduction, provided that the individual, as well as other family members included in the scheme, are below 60 years.

Under the current scheme, the premium paid for an individual’s parent’s medical insurance, who is Aged above 60, the maximum deduction available is limited to ₹30,000. An individual below the age of 60, having a senior citizen as a parent can claim a total deduction of ₹55,000, and a senior citizen with a senior citizen as a parent can claim a maximum deduction of ₹60,000 under section 80D.

These amendments are applicable from April 1, 2019.

Section 80DDB-Expenditure on the treatment of specified diseases:

This section provides for deduction in respect for expenditure incurred for treatment of diseases specified in Rule 11DD. The current limit of deduction is ₹40,000 but the Finance Minister has correctly understood the need of a raised deduction limit for the ageing citizens of India since many of such specified diseases garb hold at later stages of life. AS a part of caring the older section of the society, the FM in his Budget 2018 has increased the limit of deduction to ₹60,000 and ₹80,000 with respect of senior citizens and super senior citizens.

(NB: The data regarding specified diseases has been taken from Rule 11DD of the Income Tax rules. )

From Assessment Year 2016-17 onwards, prescriptions shall be obtained from specialist doctors in the respective fields to claim deduction under this section. These does not require to be from doctors working in Government Hospitals.

Who can avail of the benefit while filing the return?

  1. Resident Individual
  2. HUF

Treatment expenditure on who?

For Resident Individual:

  1. Self
  2. Spouse

iii.    Children

  1. Parents
  2. Siblings

For Hindu Undivided Family:

All members of the HUF.

Specified Diseases

Neurological diseases- 40% or more disability to be certified.
(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinson’s Disease
(ii) Malignant Cancers
(iii) Full blown Acquired Immuno-Deficiency Syndrome
(iv) Chronic Renal Failure
(v) Haematological disorders
(vi) Haemophilia
(vii) Thalassaemia

Limit of Deduction

*The expenditure incurred on treatment shall be reduced by insurance claims or reimbursements from employers received on account of such treatments. Such amount of expenditure or the maximum limit prescribed, whichever is lower, can be claimed by an eligible assessee as a deduction under section 80DDB from Assessment Year 2019-20 onwards.

Pradhan Manthri Vaya Vandana Yojana

In addition to these tax exemptions, the PM Vaya Vandana Yojana, which was introduced in the year 2017, was extended up to March 2020 under which the LIC of India gives out an assured return of 8% per annum, on a single lump-sum premium payable from ₹1,50,000 to ₹7,50,000. The existing limit of investment ₹7,50,000 is further raised to ₹15,00,000. The returns are payable monthly and are exempted from GST.

The PMVVY is a scheme put forward by the present government as an investment scheme in association with Life Insurance Corporation of India, ensuring a steady income of 8% per annum. The scheme is exclusively framed for senior citizens and is not open to people below the age bar. The scheme also offers loan facility up to 75% of the purchase price, after 3 years policy period.

Mode of Pension Minimum Purchase Price Maximum Purchase Price Maximum Pension 
Yearly ₹ 1,44,578/- ₹ 7,22,892/- ₹ 60,000
Half-yearly ₹ 1,47,601/- ₹ 7,38,007/- ₹ 30,000
Quarterly ₹ 1,49,068/- ₹ 7,45,342/- ₹ 15,000
Monthly ₹ 1,50,000/- ₹ 7,50,000/- ₹ 5,000

The overall impact of old-age friendly provisions of the budget

These concessions are expected to give an extra tax benefit of ₹4000 crores to senior citizens as per the F.M. The latest union budget not only focuses on improvement of quality of life of senior citizens but also takes up a mission to strengthen agriculture, rural development, health, education, employment, MSME, and infrastructure sectors of the economy.

The honourable minister also quoted Swami Vivekananda from his memoirs of European travel while commanding one of the welfare budgets to the house;

“You merge yourselves in the void And disappear, and let new India arise in your place. Let her arise – out of The peasant’s cottage, grasping the plough; out of the huts of the fisherman. Let her spring from the grocer’s shop, from beside the oven of the fritter seller. Let her emanate from the factory, from the marts, and from markets. Let her emanate from groves and forests, from hills and mountains.”

– Swami Vivekananda

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