Even as inflation has been hitting the senior citizens of India below the belt with rising expenses and diminishing returns on savings, the Union Budget 2023 presented by Finance Minister Nirmala Sitharaman presents some good news and hope. The budget provides significant relief to India’s middle-class taxpayers, senior citizens, salaried Indian employees, women and girl children.
The FM has announced a landmark rebate under Section 87A of the new income regime with a hike of up to Rs 7 lakh for the middle class to fight rising inflation.
Indian taxpayers fall under three categories: citizens below the age of 60 years both residents as well as non-residents, Indian senior citizens aged up to 60 years and above but below 80 years and senior citizens above 80 years of age. The new tax regime will now be the default tax regime from the 2023-24 fiscal year. The highest surcharge rate is slashed from 37% to 25%.
A salaried employee with an annual income of up to Rs 3 lakhs will no longer have to pay any tax. The earlier limit was Rs 2.5 lakhs. There’s 5% taxation for income between Rs 3 – 6 lakhs. The budget has unveiled a boost in investment limits for senior citizens under the Senior Citizens Savings Scheme from Rs 15 lakhs to Rs 30 lakhs. The interest rate on the Senior Citizens Savings Scheme (SCSS) has been hiked to 8% for the quarter ending March 31, 2023.
The depositor may now extend the account for a period of three years more after the maturity period of five years. The maximum deposit limit for the Monthly Income Account Scheme will be enhanced from Rs 4.5 lakhs to Rs 9 lakhs for a single account and from Rs 9 lakhs to Rs 15 lakhs for a joint account.
As of now, in this government-backed small saving scheme the interest rate is 7.40% per annum, which is comparatively higher than normal returns given by bank fixed deposits. The SCSS interest is payable on a quarterly basis. However, the Senior Citizens Saving Scheme has a lock-in period of five years. But, in case of financial requirements, premature withdrawal is allowed.
Senior Citizens Saving Scheme
A person who has attained 60 years of age is eligible to open a Senior Citizens Saving Scheme with the nearest bank or post office. An individual who is above 55 years of age but below 60 years and has retired on superannuation is also eligible for opening SCSS account.
The Indian Census 2011 observes that seniors will constitute almost 12.5% of the total population in the country by 2026 and surpass 19.5% by 2050. Senior interests have often taken a back seat, but unlike in past years, there is an increase in the government's focus on the changing needs of seniors.
The draft policy for senior citizens introduced earlier in 2020, the launch of ‘Decade of Healthy Ageing’ initiative by Dr Harsh Vardhan aligning to the UN directive, and the ‘Longitudinal Ageing Study in India’ are all testament to increased government action on prioritising seniors and their needs. For instance, the Union Budget 2021-22 proposed an Income Tax Return (ITR) exemption for senior citizens over 75 years of age. This applies if they are a resident of India and only have a pension income which is received from a bank. The relaxation also applies to interest income received from the same bank.
The budget also announced an increase in healthcare spending, with over 137% budget allocated as compared to the earlier year. The PM Atmanirbhar Swasth Bharat Yojana has been launched to ensure spending on improved infrastructure, better preparedness and access. This combined with the removal of caps on FDI in the insurance market has led to simplifying some aspects of healthcare for Indian seniors.
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