Tax, savings for senior citizens: NITI Aayog pitches for tax reforms, plans for elderly-Courtesy Money Today

NITI Aayog calls for financial and legal reforms for elderly care in India

 “Senior Care Reforms in India - Reimagining the Senior Care Paradigm: A Position Paper”

Tax, savings for senior citizens: NITI Aayog pitches for tax reforms, plans for elderly

In its comprehensive report, NITI Aayog has highlighted the need to cultivate a robust environment for senior care services. The key strategies proposed include implementing a reverse mortgage mechanism aimed at enhancing financial liquidity for seniors. Further recommendations encompass mandatory savings plans, and tax and GST reforms on senior care products.

The report has also called for a robust digital inclusion ecosystem improving access to digital devices for seniors, increasing digital literacy.

Tax saving plans for senior citizens:  The fiscal year is about to end and most investors are making hurried investments to save some more taxes for the Assessment Year 2024-25. Government think tank NITI Aayog has recently published a report for senior citizens and noted that specific actions required to ensure financial empowerment and inclusion include reskilling the elderly population, increasing coverage of public funds and infrastructure, and mandatory savings plans for the affording segment.

The report, 'Senior Care Reforms in India - Reimagining the Senior Care Paradigm', called for filling up the gaps and challenges in the current senior care ecosystem. It also strives to push the frontiers of senior care by recognising the evolving medical and non-medical needs of seniors.

 In its report, NITI Aayog said a national portal for senior care must be developed for senior citizens to provide easy access to services to them.

"The senior care system faces many challenges due to the lack of a comprehensive, integrated policy for care and support. There are gaps in infrastructure and capacities necessary for supporting the health and welfare of the elderly, evidence-based knowledge repositories for geriatric illness management, enabling frameworks and monitoring mechanisms, and emergency response systems," the report said.

Regarding taxes and savings, the report noted:

The elderly in India currently comprise a little over 10 per cent of the population, translating to about 104 million, and is projected to reach 19.5 per cent of the total population by 2050.

The report also suggested that the government should reassess the reverse mortgage mechanism to increase liquidity for seniors and make necessary amendments to the current reverse mortgage rules.

> In December 2020, the government released a draft National Policy for Senior Citizens, 16 which included various enabling provisions like integrated insurance products and savings schemes, comprehensive insurance and pension systems, senior-friendly tax structures, subsidized financing products, etc., to provide policy support for the silver economy.

> The government has recently launched the Senior Able Citizens for Re-Employment in Dignity or the SACRED portal to connect senior citizens with job providers in
the private sector.

> Based on the recommendations of the Expert Group on Silver Economy, the Senior Ageing Growth Engine (SAGE) initiative has been launched by the Ministry of
Social Justice and Empowerment government to promote and incentivize senior care products and services. The SAGE portal provides a ‘one-stop access’ to senior care products and services by identifying, aggregating, and delivering them directly to the stakeholders.

> Tax and GST reforms, etc, on senior care products (needed) to increase the ease of adoption and safeguard the elderly population from the financial burden, the Aayog said.

> The report said that the government should expand and diversify financial security nets to ensure financial support to seniors in their sunset years.

This may include:

• High-yielding investment opportunities and long-term saving plans to incentivize the habit of savings among seniors;

• A strengthened and simplified reverse mortgage mechanism to help seniors with their financial requirements, saving them from financial distress;

• Tax incentives and relaxations in income tax to seniors;

• Senior discounts on senior care products like geriatric ambulance services, home care services, assistive devices, etc., to enable faster penetration of such products and services.

> The report also called for earmarking CSR funds as a contribution to national funds for care provided to the non-affording category of the elderly in their facilities.

> It also stressed on developing partnerships with the private sector through various PPP models to encourage private medical care at discounted prices to senior persons across the medical care cycle, from consultation to diagnostics to treatment.

Tax rebates offered by the Centre

The Ministry of Finance provides Income Tax Rebates to Senior Citizens Income:
• Tax exemption for senior citizens is up to ` 3 lakhs, and only 5% is levied on income between ` 3 lakhs and 05 lakhs as per the existing
tax regime.
• Senior citizens above 80 years are exempted from paying income tax up to Rs 5 lakhs.
• Deduction in the case of every senior citizen u/s 80DDB of the Income Tax Act on expenditure on account of specified diseases has been increased.
• Section 80TTB of the Income Tax Act has provisions relating to tax benefits available on the interest income from deposits with a banking company, post office, or co-operative society engaged in carrying on the banking business of an amount up to Rs 50,000 earned by the senior citizen (i.e., an individual of the age of 60 years or above)
• Existing provisions of section 207 of the Income-Tax Act, 1961 exempt individual resident senior citizens (60+ years) at any time during the previous year from payment of advance tax which does not have any income chargeable under the head ‘Profits and gains of business or profession.’
• To incentivize the younger generation to look after their parents’ medical needs, section 80D of the I.T. Act provides a deduction to keep insurance
on the health of the parents or parents of the assessee.
• A similar deduction is also available to a Hindu Undivided Family (HUF) in respect of health insurance premiums to effect

• Under the Service Tax laws, activities relating to the advancement of education programs or skill development relating to persons over the age of 65 years residing in a rural area by an entity registered under Section 12AA of the Income Tax Act, 1961 are exempt from Service Tax.

• Concerning Savings Accounts in Banks and Post Offices, higher interest rates are given to senior citizens.

Top schemes for senior citizens listed in the report:

1.  Ayushman Bharat PMJAY: Under the scheme, ABPMJAY covers over 10 crore poor and vulnerable families (approx. 50 crore beneficiaries), providing coverage up to Rs 5 lakh per family per year for secondary and tertiary hospitalization.

2. Senior Citizen Health Insurance Scheme: This scheme, implemented since 2016, provides insurance coverage to senior citizens as a top-up over the existing RSBY Scheme. It provided a health insurance cover of Rs 30,000, available to senior citizens, in addition to Rs 30,000 under RSBY. If in any RSBY enrolled family, there were more than one senior citizen, then the additional cover was in multiples of Rs 30,000 per senior citizen.

3. Indira Gandhi National Old Age Pension Scheme (IGNOAPS): A monthly pension of Rs 200/- is given to the elderly aged 60-79 years belonging to the BPL category. The pension increases to Rs 500/-per month upon attaining the age of 80 years. The total beneficiaries under the scheme are 221 lakhs.

4. Indira Gandhi National Disability Pension Scheme (IGNDPS): A monthly pension of Rs 300/- is given to BPL persons aged 18-79 years with severe and multiple disabilities (80% disability level). The pension increases to Rs 500/- per month upon attaining the age of 80 years. The total beneficiaries under the scheme are 10.58 lakh.

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