Keeping the interest of the 76 million population of the aged in mind, the Budget has proposed several incentives for senior citizens and pensioners.
To begin with, income up to Rs 1.53 lakh will henceforth be fully exempt from income tax. If one considers the standard deduction also, the effective exemption limit works out to as much as Rs 15,250 per month or Rs 1.83 lakh per annum.
Elderly citizens can further take advantage of tax rebate under Section 88 to reduce their tax burden.
That's not all. The finance minister proposes to address the problem of bureaucratic hassles and reduce the cost of compliance for the senior citizens.
As a first step towards this, the government will accept self-declarations filed by senior citizens with regard to 'no deduction of tax at source' from interest income, and other such sources.
The Budget proposes to introduce a special pension scheme for citizens of over 55 years of age to mitigate the adverse impact of further lowering of interest rates on small savings such as public provident fund, National Savings Certificates etc, by one per cent this year.
The Varishtha Pension Bima Yojana to be launched by LIC will offer guaranteed returns of nine per cent per annum for life, in the form of a monthly pension from a minimum of Rs 250 to a maximum of Rs 2,000.
This monthly pension will start from the month following the payment of the lump-sum amount by the citizen.