Relief to Senior Citizens: Exemption of Interest Income on deposits increased to ₹ 50,000

Pradhan Mantri Vaya Vandana Yojana extended up to March 2020

Existed limit on investment under PMVVY enhanced to ₹ 15 lakhs

With the objective of providing a dignified life to senior citizens, the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley, announced significant incentives for senior citizens.

Presenting the General Budget 2018-19 in Parliament here today, the Finance Minister said that the exemption of interest income on deposits with banks and post offices to be increased from ₹ 10,000/- to ₹ 50,000/- and 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 also announced raising the limit of deduction for health insurance premium and/ or medical expenditure from ₹ 30,000/- to ₹ 50,000/-, under section 80D. All senior citizens will now be able to claim benefit of deduction up to ₹ 50,000/- per annum in respect of any health insurance premium and/or any general medical expenditure incurred.

Further, the Finance Minister proposed raising the limit of deduction for medical expenditure in respect of certain critical illness from ₹ 60,000/- in case of senior citizens and from ₹ 80,000/- in case of very senior citizens, to ₹ 1 lakh in respect of all senior citizens, under section 80DDB.

These concessions will give extra tax benefit of ₹ 4,000 crores to senior citizens.

In addition to tax concessions, the Finance Minister proposed to extend the Pradhan Mantri Vaya Vandana Yojana up to March 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of ₹ 7.5 lakh per senior citizen under this scheme is also being enhanced to ₹ 15 lakh.

Exemption of interest income for senior citizens increased, with TDS relief and enhanced health and critical illness deductions. The budget increases the exemption of interest income on deposits for senior citizens and removes the TDS requirement for such interest, covering bank, post office, fixed and recurring deposits. It raises the cap on deductions for health insurance premiums and general medical expenditure for senior citizens and standardises a higher deduction limit for medical expenditure relating to critical illnesses. The government also extends the senior citizen assured-return scheme and raises its per-person investment ceiling, yielding a material tax benefit to senior citizens.