Special
Tax Calculation For A Senior Citizen Earning Interest Income
FY 2017-18
FY 2018-19 FY 2017-18
FY 2018-19
(AY 2018-19) (AY 2019-20) (AY 2018-19) (AY 2019-20)
Impact
80D and
80TTA 80D and
80TTB 5,00,000 40,000 1,00,000 8,240 5,200 3,040
10,00,000 40,000 1,00,000 1,05,060 93,600 11,460
25,00,000 40,000 1,00,000 5,64,440 5,51,200 13,240
55,00,000 40,000 1,00,000 16,40,584 16,35,920 4,664
Gross Income
Tax Liability
Tax Liability
Saving/
(Loss)
Table C Note : In case the senior citizen is also the pensioner, tax saving will increase in such cases due to introduction of standard deduction. The
exact benefit would depend on the tax slab in which the concerned senior citizen will fall. *All figures in ` Source: Kuldip Kumar
standard deduction is to extend the benefit to the
2.5 crore pensioners (senior citizen category)—the
government wanted to put more money in their
pockets. Nevertheless, this proposal will free the
taxpayers and the employers from the administrative
burden of collecting and retaining the bills for medical
reimbursements. Table A shows how the above proposal
impacts the various taxpayers falling under the different
income groups.
One may note that those falling in the lower income
groups will have negligible impact. But those in higher
income groups will be required to shell out more.
stock exchanges in India and subject to STT (Securities
Transaction Tax) on both sale and purchase. Such gains
exceeding `1 lakh are proposed to be taxed at 10 per
cent (without indexation), which are presently exempt
from tax. However, the appreciation accrued until
January 2018 has been protected due to grandfathering
provisions. Small investors with LTCG not exceeding
`1 lakh would also remain unaffected. Calculation of
taxation of LTCG is illustrated in Table B.
Dividend Distribution tax on equity oriented
mutual funds: If you are an investor in any equity
oriented mutual funds, your future returns from such
funds may be tempered as the FM has proposed to
charge dividend distribution
tax (DDT) at 10 per cent on
equity oriented mutual funds.
Presently, no DDT is levied on
these schemes.
Sops For Seniors
LTCG from sale of equity shares: This is the only
asset class that has been doing
well this year and how could it
have escaped the attention of
the government from collecting
some piece of tax out of it? In
fact, this fear was not unfounded
by the tax payers as the Prime
Minister had hinted at this tax
long time back in one of his
speeches. Yet, people were not
expecting this to happen as the
government has already formed a
task force to review re-writing of
the decades-old Income Tax Act,
1961. Such structural changes
were perhaps expected later
when re-writing would happen.
The FM has proposed to tax
the long-term capital gains
(LTCG) on sale of equity shares
and equity-oriented mutual
funds listed on recognised
Deduction for health insurance/
medical expenditure increased
from `30,000 to `50,000
Deduction of `50,000
introduced in relation to
interest on fixed or term deposit
Deduction in relation to
specified disease u/s 80DDB
raised to `1,00,000
Investment cap for Pradhan
Mantri Vaya Vandana Yojana
raised to `15 lakh
Senior citizens
If anyone has to be happy with
this Budget, it is the senior
citizen tax payers. There were
long standing demands to
protect their earnings in the
declining interest regime, as
senior citizens park their funds
largely in fixed return saving
schemes. They are also required
to spend money on routine
medical check-ups and they
needed a tax deduction for such
medical expenditure. To some
extent these expectations have
been met in this Budget.
www.outlookmoney.com February 2018 Out look Money
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