The only section of the society who got some advantage from the Union Budget are the senior citizens. In the Union Budget 2018, the Finance Minister offered a bouquet of benefits especially for the retired people who constitute around 9 per cent of the total population. The tax advantage of two-pronged, impacting their tax benefits and health protection.
The Union Budget holds many proposals that would definitely cheer up the senior citizens. The increase in the deduction limit under section 80D of the Income-tax Act under which a person can easily avail the advantages for payment of health insurance premiums and the growing medical care cost. You must be aware of the fact that the premiums that you pay towards a health insurance policy qualify for tax deduction.
In India, a deduction is a basic tool that you can use to reduce the tax liability. It’s normally a reduction of the total income and what is left after the same is known as taxable income. The Union Budget 2018, has come out with an increase in the deduction limit for senior citizens that is from Rs 30,000 to a maximum of Rs 50,000.
This beneficial change would be applicable in the financial year 2019. For someone who lies in the highest tax bracket of 30 per cent of the effective income tax rate that would now be 31.2 per cent, given that the education cess has been increased to 4 per cent the tax savings would be up to Rs 15,600, compared to Rs 9,270 now.
Well on an average, the senior citizen section of India pays nearly Rs 10,000 as premiums, but the health insurance cover is completely not sufficient with the rising health-care costs and their increased medical attention. The increase in the deduction limit will surely encourage the senior citizen when it comes to buying a higher health insurance policy.
The medical inflation is rising at the rate of 13-15 per cent. The improved deduction of Rs 50,000 and the additional critical illness exemption will incentivise senior citizens which would offer the needful medical insurance coverage through which it will be easy to tackle the burden of medical emergencies.
This is one of the greatest benefits that the senior citizen below the age group of 60 years will get on the payment of health insurance premium.
It is also a tax saving option for those who invest a lot in buying big health insurance plans for their parents as the extremely high premiums for senior citizens have been deterrent till now.
It is a great beneficial tool for those who have parents as senior citizens and pay premiums on their behalf. Under section 80D, a person can easily ask a deduction for health insurance bought for self, spouse, and children. Moreover, you can claim a further deduction for policies that have been purchased in the name of parents.
So if your parents are under 60 years of age, then the total deduction available to you is Rs 50,000. The Budget 2018 has not brought any changes here. But if you have senior citizen parents who are above 60 years, then you can claim an additional deduction of up to Rs 50,000taking the total deduction to Rs 75,000. The preventive health check-up limit of Rs 5,000 for self and another Rs 5,000 for parents is within this limit.
Moreover, after the announcement of Union budget, a deduction of Rs 50,000 towards medical care expenses in-place of claiming for a health insurance premium only.
Currently, senior citizens who are in the age-group of 80 years of age can easily claim a deduction of up to Rs 30,000 that take place because of medical expenditure, in case they don’t have health insurance. The Budget has increased this limit to Rs 50,000 and also allowed the same flexibility to senior citizens. Even those who pay premiums on the behalf of their dependent senior citizen parents can ask for an additional deduction on health insurance premium or medical expenditure.
Other than increasing the deduction under section 80D of the Income-tax Act, the Union Budget has also increased the limit of deduction for medical expenditure for self, spouse, dependent parents, children and siblings in respect of certain critical illness like malignant cancers, chronic renal failure, Haemophilia and Thalassaemia from Rs 60,000 in case of senior citizens and Rs 80,000 in case of very senior citizens to Rs 1 lakh for all senior citizens under section 80DDB. For non-senior citizens, this deduction limit continues to be Rs 40,000.
The article is written by Naval Goel – CEO and Founder of PolicyX.com