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Senior citizens were looking at the Budget 2018 with a lot of hope and Finance Minister Arun Jaitley too reciprocated with announcements that would reduce the stress for senior citizens. The Budget 2018 offered to increase the investment limit under Pradhan Mantri Vaya Vandana Yojana to Rs 15 lakh from extant limit of Rs 7.5 lakh. The Union Budget 2018 also extended the scheme to March 2020. The scheme was launched last year.
The exemption for senior citizens on account of health insurance premium is raised to Rs 50000 from extant Rs 30000 under section 80D.
The interest earned up to Rs 50000 from deposits with banks and post offices will be exempted instead of Rs 10,000 now. This will ensure that the TDS shall not be required to be deducted on such income, under section 194A. This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.
The Finance Minister Arun Jaitley also proposed to increase the limit of deduction for medical expenditure in respect of certain critical illness from Rs 60000 in case of senior citizens and from Rs 80000 in case of very senior citizens, to Rs 1 lakh in respect of all senior citizens, under section 80DDB.
In this budget speech the Finance Minister Arun Jaitley made it clear that these concessions will give extra tax benefit of Rs 4,000 crore to senior citizens.
Though the tax slabs are not revised, the introduction of standard deduction for all individual tax payers to the extent of Rs 40000 should also help the senior citizens with less tax liability.
On the one hand the finance minister gave some tax relief to the senior citizens, and on the other hand he gave an enhanced PMVVY to ensure higher interest on the investible corpus of the senior citizens. This should work better for senior citizens.
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