Budget 2025 wish list: Increase senior citizens' basic exemption limit to Rs 10 lakh, provide relief on health premium deduction

This should be raised to Rs 10 lakh under the new, minimal exemptions regime, feel tax experts. “Ideally, the basic exemption limit should be raised for all tax-payers as the middle class is need of significant tax relief. However, this is particularly critical for senior citizens (as they could be financially vulnerable in the absence of a steady stream of income). By increasing the basic exemption limit to Rs 10 lakh, the government will eliminate the hassle of filing tax returns for senior citizens and boost the ease of living for this section of the population,” says Mumbai-based chartered accountant Chirag Chauhan, Founder, CA Chauhan & Co.

Also read: Budget 2025: Introduce separate tax benefit for term insurance, increase health premium deduction limit, say top insurance officials

Enhance 80D deduction limit on health insurance premiums

Given the rising healthcare inflation – 12-15 percent as per industry estimates – a health insurance cover is a basic necessity. The increasing cost of medical treatment is especially harsh on senior citizens, as the frequency of hospitalisation tends to be higher. Their premiums, too, have shot up post COVID-19.

And this calls for an increase in the section 80D deduction limit for health insurance premiums paid, which is available under the old regime. “The government should reduce tax burden by increasing the limits under section 80D of the Income Tax Act for premium paid for health insurance to Rs 50,000 for all and Rs 1 lakh for senior citizens,” adds Srikanth Kandikonda – Chief Financial Officer, ManipalCigna Health Insurance.

Also read: Ayushman Bharat scheme: Why senior citizens over 70 need separate health insurance covers despite PM-JAY

Allow deductions on both medical expenses and health premiums

Under the old tax regime, senior citizens who do not have health insurance covers are entitled to a deduction of up to Rs 50,000 under section 80D on medical expenses incurred. Besides raising the deduction limit, the financial minister should permit them to claim deductions for both – health premiums as well as medical expenses incurred.

This will provide the much-needed financial cushion for senior citizens as health insurance policies do not cover routine medical expenses such as doctors’ consultation fees and investigations, which are a drain on their financial resources.