Benefits to Senior Citizens- Budget 2018 BY CS DIVYA BAJPAI

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Budget 2018 brings so much full of bucket for the elder resident of India. Even you can say this budget as “Oldies Budget”. Now, we discuss various provisions briefly with examples.
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• Deduction available to senior citizens in respect of health insurance premium and medical treatment:- Under section 80 D, the monetary limit of deduction is raised from rupees 30,000 to rupees 50,000. Such deduction is allowed in respect of payments towards annual premium on health insurance policy, or preventive health check-up of a senior citizen, or medical expenditure of very senior citizens. In case of single premium health insurance policies having cover of more than 1 year, the deduction is allowed on proportionate basis for the number of years for which health insurance cover is provided. This provision is effective from 1st April, 2019 and apply to the AY 2019-20.

Comment:-Under Section 80D, the limit of deduction is increased from 30k to 50k.
For example, Mr. Rahul, aged 65 years made payment towards annual premium of rupees 40,000 per year on health insurance policy ( 5 year policy)
Thus, the deduction allowed under Section 80 D for AY 2019-20 is rupees 10,000 on proportionate basis.( Rupees 50,000/ 5 years). Total taxable amount 40,000-10,000(deduction u/s 80D on proportionate basis)= 30,000.
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• Deduction to senior citizens for medical treatment of specified diseases:- Under Section 80 DDB, the monetary limit of deduction is increased to rupees 1,00,000 for both senior citizen and very senior citizens. This provision is effective from 1st April, 2019 and apply to the AY 2019-20.

Comment:-Under Section 80 DDB, the limit of deduction is raised from rupees 60,000 to 1,00,000 in case of senior citizens(age of 60 years or more) and from rupees 80,000 to 1,00,000 in case of very senior citizens(age of 80 years or more).
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• For Example, Mr. Sukh, aged 65 year is suffering from specified disease covered under section 80 DDB, for which medical treatment amounts to rupees 2,00,000.

Mr. Sukh will get deduction of rupees 1,00,000 for AY 2019-20. The total taxable amount is equal to rupees 1,00,000 (2,00,000- 1,00,000).
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• What if Mr. Sukh aged 85? Will the answer be same?

Yes the answer will be the same.

• Deduction in respect of interest income to senior citizen:- A new Section 80 TTB is inserted to allow deduction upto Rupees 50,000 in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases. This provision is effective from 1st April, 2019 and apply to the AY 2019-20. Further as per Section 194 A, the deduction of tax at source on interest income for senior citizens is raised to rupees 50,000.This provision is effective from 1st April, 2018.

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Comment:- A new Section is inserted 80 TTB with deduction on interest income from deposit for senior citizen upto Rupees 50,000 but then the assessee can not avail the deduction of rupees 10,000 on interest income from saving account under section 80TTA. Hence, the senior citizen can take benefit of either section 80 TTA or newly inserted section 80 TTB. It is advisable for senior citizens to take benefit of Section 80 TTB as the additional deduction of rupees 40,000 (50,000-10,0000) is available.
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For Example, Mr. Manish, aged 62 years deposited his money in Post Office(PO) getting interest income of rupees 1,00,000 in a year. He also get interest income on Saving Bank Account(SBA) of rupees 50,000 in a year.
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The total deduction availed by Mr. Manish for AY 2019-20 is equal to rupees 50,ooo under provisions of newly inserted Section 80 TTB. If the deduction under 80 TTB is allowed then deduction under 80 TTA can not be claimed by the assessee. The Income chargeable to tax is equal to 1,00,000 [1,00,000(PO interest) + 50,000(SBA interest) - 50,000 (deduction u/s 80 TTB)]
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• Standard Deduction on Salary Income:- A Standard deduction is allowed upto rupees 40,000 or amount of salary received, whichever is less. In lieu of this, the Transport Allowance(except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn. However, Pension is taxable under the head salaries in your Income Tax Return. The pensioner who did not get benefit of Transport Allowance and reimbursement of medical expenses after retirement from job now get standard deduction of rupees 40,000 from his income by way of pension. This provision is effective from 1st April, 2019 and apply to the AY 2019-20

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Comment:- The Standard Deduction of rupees 40,000 is given in lieu of transport allowance and reimbursement of medical expenses. But the senior citizens who get their pension can avail this standard deduction of rupees 40,000, as income from pension is taxable under the head Salaries under Income Tax Act.
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For Example, Mr, Saurabh, aged 64 years retired employee getting monthly pension of rupees 3o,ooo from the organisation where he worked for more than 30 years.
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Mr. Saurabh is a pensioner and pension is taxable under head salaries of the income tax. The total pension for AY 2019-20 is rupees 3,60,000 and the standard deduction allowed is rupees 40,000. Thus, the total taxable income is equal to Rupees 3,20,000 [3,60,000 (Annual Pension) -40,000 (Standard deduction)]
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WRITTEN BY: CS DIVYA BAJPAI. Author can be contacted at divya@lexdiligent.com