Budget 2022 expectations for retired employees and senior citizens: In view of the rising cost of living, retired employees and senior citizens have huge expectations from Finance Minister Nirmala Sitharman’s Budget 2022 Speech.
Budget 2022 expectations for retired employees and senior citizens: In view of the rising cost of living, retired employees and senior citizens have huge expectations from Finance Minister Nirmala Sitharaman’s Budget 2022 Speech on February 1. Several tax experts also feel it is high time to introduce new measures for the benefit of senior citizens and pensioners.
In their pre-budget expectations, experts at Tax2Win said they are expecting an increase in the basic tax exemption limit for senior citizens to Rs 5 lakh. Currently, the basic exemption limit for senior citizens is Rs 3 lakh.
“At present, senior citizens are not required to pay tax on income up to Rs. 3 lakh. It is expected that even if the basic exemption is not increased for normal citizens, the limit may be increased for senior citizens. The limit should be increased to Rs. 5 lakh to bring them on par with super senior citizens,” they said. These experts also expect that tax deduction up to Rs 1 lakh will be allowed for senior citizens under Section 80DDB for Covid-related hospitalisation expenditure. Section 80DDB currently covers medical expenses incurred on the treatment of specified diseases.
ALSO READ | Senior Citizens Savings Scheme to FD, RD: Rs 1,00,000 Section 80TTB benefit suggested by SBI Research
Some experts are also expecting that the upcoming Budget 2022 will end the disparity in the tax treatment of annuity/pension schemes with other investment schemes.
“Retired employees in the Government and – currently pension/annuity products are taxed differently from other investment products such as fixed deposits, mutual funds and shares where only the gains are taxed and not the principal. In the case of annuity products if the pension is commuted, up to 60% of the corpus is considered as tax-free whereas in case the commutation option is not exercised entire pension amount is taxed. This is unequal treatment and in order to promote retirement planning this asymmetry in the treatment of genuine pension products should be removed and the principal portion of an annuity product even in absence of commutation should not be taxed,” Paras Nath, Partner, Tax & Regulatory Services at, T R Chadha & Co LLP, told FE Online.
ALSO READ | Increased National Pension System additional deduction limit from Rs 50,000 to Rs 1 Lakh in Budget wishlist
Ritobrata Sarkar, Head of Retirement – India at WTW, said a further increase in NPS contribution from 10% to 14% of salary is anticipated.
“More options in terms of capital guarantee for NPS in the accumulation phase, as well as additional flexibility for drawdown options post-retirement, may go a long way in increasing attractiveness and take-up rates for NPS,” Sarkar said.
The Spuzz is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.