Income Tax: Retired? Here is what Budget 2012 may have to offer

I felt that Union Budget 2011 was a budget for retired people like me. The finance minister's proposal to bring down the age limit to 60 years applicable to senior citizens for availing the higher basic exemption limit for income tax purpose was indeed a welcome move.

Senior citizens above the age of 65 years currently enjoy the benefit of having tax exemption up to Rs 2 lakh 50 thousand. If tax exemption limits for individuals is enhanced, then I expect this limit of tax exemption for senior citizens like me going up towards the Rs 4-5 lakh mark.

Even perhaps up to Rs 3 lakh would give a boost to our retirement funds.

This can be a huge boost to the disposable income of pensioners and retired individuals in the twilight of their lives.

And a lot more can be done to make our lives easier.

However, there are some proposals in the Direct Tax Code that are anything but friendly for the retired section of India's population.

It is proposed in the DTC that the annuity part of the pension be made tax free. The pension product has two phases, one being the accumulation phase and the other being the annuity phase.

Removal of taxation on annuity part of pension plans will have a great impact on the surplus funds available with the individuals invested in pension plans. The union budget is not in our hands but what is in our hands is the way in which we deal with it.

There should be some  avenues available to the retired on the lines of present deduction under Section 80C as senior citizens do not have any avenues available under the proposed Section 69 of DTC.

So the first thing which a household needs to do is to have its own budget in place. The problem is not about the fixed and definite expenses but the variables which actually makes all the difference.

Also Read: Budget Expectations: Wishlist of the common man

Just like the Union Budget allocates money for projects, the retired need to be sure on what their milestones and goals will be for which one needs to allocate the required funds.

Also keep an emergency provision which could be needed as things could become dearer and necessary. Finally it is important to review whether our proposed plans are actually meeting our targets. If not then we better review it.

Let us us hope many of these expectations get fulfilled by Pranab Mukherjee on March 16, 2012.