Budget 2019 pronouncements: Advantage RetyrSmarters!
In the recent Union Interim Budget presented on 1st February, 2019 the Government of India has announced a number of salutary measures, especially for the farmers and middle class. For the discerning, the Government has continued to be good to the senior citizens too.
This clearly acknowledges the growing absolute number of senior and retired persons in the country and of course the farmers, especially the poor amongst the land owning tillers. Whilst as a percentage, younger people constitute a large majority of the Indian population, it is a fact that the number of Retrysmarters are growing year after year.
Rs.2,00,000 p.a. tax benefit with increase in threshold tax limit increased from Rs.3,00,000 p.a. to Rs.5,00,000 p.a. for Senior Citizens uptil 80 years of age
The Government of India has announced that there would be no tax upto an income of Rs.5,00,000 p.a. from the hitherto limit of Rs.3,00,000 p.a. for Senior Citizens uptil the age of 80 years. For those 80 years and above, the no tax income limit continues to be Rs.5,00,000 p.a.
Besides, Standard Deduction from Salary and/or Pension Income is being increased from Rs.40,000 to Rs.50,000. This is over and above the no tax limit on interest income of Rs.50,000 from Banks (both interest on savings bank accounts as well as fixed deposits) for senior citizens. To further reduce the hardship of Senior Citizen RetyrSmarters , there would not be any tax deduction at source uptil Rs.40,000.
No tax uptil an income of more than Rs.70,800 per month for Senior Citizen RetyrSmarters
Therefore, for RetyrSmarters , there is no tax uptil an income of Rs.6,00,000 (Rs.5,00,000 plus standard deduction of Rs.50,000 plus interest on bank deposits of Rs.50,000). This may be further increased to Rs.7,50,000 by contributing Rs.1,50,000 to PPF and other eligible investments under Section 80C and to a further Rs. 8,00,000 by taking a Medical Insurance Policy to the extent of Rs.50,000. Furthermore, this may be increased to Rs.8,50,000 for RetyrSmarters uptil the age of 70 years by investing Rs.50,000 p.a. under the National Pension Scheme. Therefore, there is effectively no tax uptil an income of Rs.70,833.33 per month.
Over and above this, there would not be any notional income from the second home that you may own which has not been rented.
The detailed provisions are as follows:
# Standard Deduction (Sections 16 and 17 of the Income Tax Act) on Salary Income has been increased from Rs.40,000 to Rs.50,000.
# This Standard Deduction of upto Rs.50,000 would also be available for those not working and drawing a pension. and hence a major benefit.
# Deduction in respect of interest income (banks and post offices) of senior citizens (Section 80TTA) upto an amount of Rs.50,000 p.a., with no TDS upto Rs.40,000 p.a.
# Section 80 D: deduction continues to be available for medical insurance policy for senior citizens up to Rs.50,000; this was increased from Rs.30,000 to Rs.50,000 last year.
# The important inclusion in Section 80D is to also cover claiming of medical treatment incurred for those senior citizens who do not have a medical insurance policy. This is an important, friendly measure as many retired RetyrSmarters may not have a medical insurance policy. With costs of medical treatment steeply going up every day, this is a welcome provision as up to Rs.50,000 of such expenses per person would now be available for tax deduction.
# Therefore, in the case of husband and wife, both would now be entitled to claim actual medical expenses upto Rs.50,000 each, that is, in all totaling to Rs.1,00,000. This benefit is available provided both husband and wife are filing tax returns.
# Deduction under Section 80DDB for payment of treatment of specified diseases has been increased to Rs.1,00,000 last year for both senior citizens as well as very senior citizens.