The Union Finance Minister Shri Arun Jaitley said that the taxation is a major changes which will benefit senior citizens in the country.
Individuals who are above the age of 60 years, but less than 80 years at any time during the respective year will be eligible for tax benefits under income tax act.
1. Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
2. In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016.
3. Limit for contribution of employer in recognized Provident and Superannuation Fund of Rs 1.5 lakh per annum for taking tax benefit. Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees.
4. Reduce service tax on Single Premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.
The National Pension System, where up to 40 per cent, of the corpus is exempt is a good option for retired individuals. Under the NPS once can invest a sum of money each year, if the individual is between the ages of 18 to 60 years.
The minimum amount an individual can contribute is Rs 500 per contribution, while the total contribution must be at least Rs 6000 every year.
On retirement an individual who has attained the age of 60 years, has to to invest at least 40 per cent of the pension fund so accumulated in an annuity and the remaining 60 per cent can be redeemed as a lump sum.
As is the case with Union Budget's it tends to take care of Senior Citizens. Last year, it maybe recalled that the Union Budget 2015-16, hikes the tax benefits for senior citizens, who for the health insurance paid.
Even very senior citizens have been given tax benefits from time to time. It is not hoped that the interest rates may also be hiked on select schemes for retired individuals, that would help them to receive a decent monthly income to sustain themselves.