Income Tax- Expectation of Senior Citizens from Budget 2023

Individual taxpayers are hoping that Finance Minister Nirmala Sitharaman will announce a slew of tax benefits on February 1 because Union Budget 2023 is likely to be the country's final full-year Budget before the 2024 general elections.
Some of the key items on tax-payers' wish-list this year include an increase in the basic exemption threshold and a section 80C limit of Rs 1.5 lakh, a simpler capital gains tax structure, sops for the housing sector, more tax reliefs under the new tax regime, and so on.
Raising the basic exemption threshold for senior citizens (those over the age of 60) from Rs 3 lakh to Rs 5 lakh, to match that of very senior citizens (those over the age of 80), is a key demand.

Increasing the limit of section 80C

Deduction under Section 80C of the IT Act encompasses the majority of savings/investment-based deductions, including deposits in Senior Citizen Savings Schemes ('SCSS') as per SCSS Rules, 2019, contributions to 5 year Term Deposits, LIC, PPF, subscription to National Savings Certificates ('NSC'), and so on. Given the number of savings/investment-based deductions available, the maximum deduction available under this section is Rs. 1,50,000. As a result, the aforementioned limits, which were last revised in the 2014 Budget, are expected to be revised upwards. In addition to the Rs. 150,000 deduction limit under Section 80C, senior citizens aged 60 and above are expected to receive an additional deduction limit of Rs. 50,000.

Holding period for specified investments under Section 80C be reduced for senior citizens

Certain investments, such as fixed deposits with banks or post offices, NSCs, and Equity Linked Savings Schemes ('ELSS'), are eligible for deduction under Section 80C subject to specified lock-in periods ranging from three to five years (for ELSS) (for NSC and fixed deposits). Many senior citizens may require liquid cash for their physical well-being, medical care, or other emergencies. As a result, it is expected that the aforementioned lock-in timelines will be revised and rationalised for senior citizens.

Increased threshold limit for Sec 80TTB and the scope to include NSC interest

Section 80TTB of the IT Act allows every senior citizen to deduct up to Rs. 50,000 in interest on deposits with a specified banking company, a co-operative society engaged in the business of banking, or a Post Office in a given fiscal year. However, the said limit has not been increased in the last five years and requires adjustment based on the current rate of inflation. The current limit of Rs. 50,000 is expected to be raised to Rs. 75,000.
Furthermore, because interest income on NSC is one of the primary sources of income for many senior citizens, it should be included in the scope of 80TTB.

Increasing the Mediclaim Premium Threshold for Senior Citizens

Senior citizens are the greatest sufferers in this situation, as a result of global medical concerns arising from the spread of covid, as well as other lifestyle and health issues. As a result, medical expenses and health insurance or mediclaim premiums have risen dramatically. The current provisions allow a deduction of Rs. 50,000 under section 80D for any mediclaim premium/medical expenditure incurred by a senior citizen. As a result, the said threshold limit is expected to be raised to Rs. 100,000.

Reducing the age limit for senior citizens under Section 194P

Section 194P of the IT Act exempts Senior Citizens aged 75 and up from filing income tax returns, subject to the following conditions:

• Senior Citizen must be 75 years old or older.
• Senior Citizen must have been a 'Resident' in the previous year.
• Senior Citizen has only pension income and interest income accrued / earned from the same specified bank from which he receives his pension.
• Such a benefit could be extended to senior citizens aged 65 and up in order to relieve them of the burden of filing their returns.

Increasing the threshold limit for medical treatment of senior citizens

Section 80DDB of the IT Act allows a resident individual to deduct the amount actually paid for medical treatment of a specified disease for the assessee or a dependent relative (spouse, children, parents, brothers and sisters). In the case of a senior citizen patient, the threshold limit for such a deduction is Rs. 100,000. However, given that the last revision was in the Finance Act of 2018, as well as the current medical cost inflation, the amount should be increased to Rs. 1,50,000.