The Senior citizen’s pension income is considered the same as salary and computed as income from salary. The basic exemption ceiling for senior citizens is Rs.3 lakh and super senior citizens are Rs.5 lakh in the old tax regime. No increased basic exemption benefit is provided to senior and super senior citizens in the new tax regime.
The increase in the inflation rate had increased the cost of living. It has surpassed the interest rates provided by the banks on savings in the bank account. The interest rates on other safe avenues like fixed deposit, Kisan Vikas Patra, etc. had also been sliding in the last few years. The pandemic had adversely affected the senior citizens’ earnings who are solely dependent on investments, for example, income from rent. The people who have earned less than average during their working years receive fewer retirement benefits. The government should assist with some incentives to such specific senior citizens.
A large portion of spendings by senior citizens is towards medical expenses. The annual premium on life and medical insurance is significantly high. The senior citizen will hesitate to put money in risky investment options where the market’s performance is uncertain.
Also Read: Changes You Can Expect on Old and New Tax Regimes in Budget 2021
In addition to the above, Income from various retirement schemes is taxable during maturity. Interest received on Senior Citizens Savings Scheme (SCSS), monthly annuity income received from NPS and superannuation scheme are taxable.
Hence, exempting tax liability on such schemes would promote savings towards pension plans. The government should consider providing some income tax relief to the senior citizens to meet their necessary expenses. Hence, the government should introduce a financial assistance scheme for senior citizens. The upcoming budget should bring reform by improvement in erratic essential supplies and medical care.
For any clarifications/feedback on the topic, please contact the writer at jyoti.arora@cleartax.in
I’m a chartered accountant and a functional CA writer by profession. Reading and travelling in free time enhances my creativity in work. I enjoy exploring my creative side, and so I keep myself engaged in learning new skills.
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