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• Direct Tax Benefits for Senior Citizen
• U/S 80 D Medical Insurance Premium paid by cheque is deductible Rs. 10000 to all individual and for senior citizens (65 Years) this deduction will be increased to Rs.15000.
• U/S 80 DDE medical treatment in respect of diseases and ailment specified in Rule 1 ID will be allowed deduction Rs. 40000 and actual expenses whichever is less. In case of senior citizens this deduction will be increases to Rs.60000.
• With effect from 1.4.2006 deduction from gross total income in respect of premium paid to LIC; deferred annuity contribution to provident fund; subscription to certain equity shares; debentures etc. will be allowed up to Rs. 1 lacs, to all individual including senior citizens.
Rate of Tax for different income slab
| Income Slab |
Rate of tax for male below 65 years |
Rate of tax for women below 65 years |
Rate of tax for senior citizen above 65 years |
upto Rs. 1,00,000 |
Nil |
Nil |
Nil |
Rs. 1,00,001 to Rs. 1,35,000 |
10% |
Nil |
Nil |
Rs. 1,35,001 to Rs. 1,50,000 |
10% |
10% |
Nil |
Rs. 1,50,001 to Rs. 1,85,000 |
20% |
20% |
Nil |
Rs. 1,85,001 to Rs. 2,50,000 |
20% |
20% |
20% |
> Rs. 2,50,000 |
30% |
30% |
30% |
A surcharge @ 10% is to be applied where income exceeds 10 lacs in all the above cases. Education cess shall be levied at the rate of 2% in all cases.
Suppose for any individual business income Rs. 300000; income from hose property (gross) Rs. 120000 and interest from bank Rs. 10000.
His contribution to public provident fund 50000, ICICI tax saving bond purchased Rs.40000, repayment of house building loan Rs.15000, municipal tax 1200.
Computation of Gross Taxable Income for the assessment year 2006-2007
| Income from house property |
| Gross annual value |
1,20,000.00 |
| Less-municipal tax |
1,200.00 |
| Net annual value |
1,18,800.00 |
| Less standard deduction @30% of net annual value |
35,640.00 |
83,160.00 |
| Income from business
|
3,00,000.00 |
| Income from other sources
|
| Interest from bank |
10,000.00 |
| Gross total income |
3,93,160.00 |
| Less-deduction u/s 80C |
| Contribution to public provident fund |
50,000.00 |
| ICICI tax saving bond |
40,000.00 |
| Repayment of house building loan (subject to max. 1 lac) |
15,000.00 |
| Total Income |
2,93,160.00 |
Computation of tax payable
| Income Slab |
Rate of tax for male below 65 years |
Rate of tax for women below 65 years |
Rate of tax for senior citizen above 65 years |
upto Rs. 1,00,000 |
Nil |
Nil |
Nil |
Rs. 1,00,001 to Rs. 1,35,000 |
3,500.00 |
Nil |
Nil |
Rs. 1,35,001 to Rs. 1,50,000 |
1,500.00 |
1,500.00 |
Nil |
Rs. 1,50,001 to Rs. 1,85,000 |
7,000.00 |
7,000.00 |
Nil |
Rs. 1,85,001 to Rs. 2,50,000 |
13,000.00 |
13,000.00 |
13,000 |
> Rs. 2,50,000 |
12,948.00 |
12,948.00 |
12,948.00 |
| |
| Tax payable without cess |
37,948.00 |
34,448.00 |
25,948.00 |
From the above table we see that for the same income and investment female below 65 getting tax benefits Rs. 3500.00 and senior citizen getting benefits 12000.00. But only around 5%-6% of the senior citizen pays taxes, so exemption on account of income tax would only benefit them. More indirect tax benefits specially tax relief on medicine which is generally used by senior citizen to be given to the senior citizen.
• Reverse Mortgage Loans for Senior Citizens
With reference to paragraph no. 89 of the Union Budget Speech 2007-08, read out by the Hon'ble Finance Minister, it was indicated that “National Housing Bank will shortly introduce a novel financial product for senior citizens; a ‘reverse mortgage' under which a senior citizen who is the owner of a house can avail of a monthly stream of income against the mortgage of his/her house, while remaining the owner and occupying the house throughout his / her lifetime, without repayment or servicing of the income and addressing their financial needs. Secular increase in residential house prices has created considerable “home equity” wealth. For most Senior Citizens, the house is the largest component of their wealth.
Conceptually, Reverse Mortgage seeks to monetize the house as an asset and specifically the owner's equity in the house. He scheme involves the Senior Citizen borrower(s) mortgaging the house property to a lender, who then makes periodic payments to the borrower(s) during the latter's lifetime. The Senior Citizen borrower is not required to service the loan during his lifetime and therefore does not make monthly repayments of principal and interest to the lender. On the borrower's death or on the borrower leaving the house property permanently, the loan is repaid along with accumulated interest, through sale of the house property. The borrower(s) / heir(s) can also prepay the loan with accumulated interest and have the mortgage released without resorting to sale of the property. Reverse mortgages are one product within the “equity Release” category.
• Reverse mortgaging Loans (RMLs) are to be extended by Primary Lending Institutions (PLIs) viz. Scheduled Banks and Housing Finance Companies (HFCs) registered with NHB.
• Eligible Borrowers:
• Should be senior citizen of India above 60 years of age.
• Married Couples will be eligible as joint borrowers for financial assistance provided both are above age of 60.
• Should be the owner of a residential property (house or flat) located in India , with clear title indicating the prospective borrower's ownership of the property,
• The residential property should be free from any encumbrances.
• The prospective borrowers should use that residential property as permanent primary residence.
• Determination of Eligible Amount of Loan:
• The amount of loan will depend on market value of residential property, as assessed by the PLI, age of borrower(s), and prevalent interest rate. Quantum of loan maybe fixed as per the following table:
• Nature of Payment:
Any or a combination of the following:
• Periodic payments (monthly, quarterly, annual) to be decided mutually between the PLI and the borrower upfront.
• Lump-sum payments in one or more tranches
• Committed Line of Credit, with an availability period agreed upon mutually, to be drawn down by the borrower
It is important that nature be decided in advance as part of the RML covenants. PLI at their discretion may consider providing for options to the borrower to change.
• Eligible End use of Funds
The loan amount can be used for the following purposes:
• Up gradation, renovation and extension of residential property.
• For uses associated with home improvement, maintenance / insurance of residential property
• Medical, emergency expenditure for maintenance of family
• For supplementing pension / other income
• Repayment of an existing loan taken for the residential property to be mortgaged
• Meeting any other genuine need
Used of RML for speculation, trading purposes shall not be permitted
Period of Loan: Maximum 15 years
Currently this scheme is only on recommendation stage. These have been formulated after taking to various representative organizations for senior citizens. This scheme will protect those senior citizens who feel neglected from their families. In this connection we must remember that this is a loan product and rate of interest at which this loan will be given to senior citizens will depend on the prevailing market rate of interest.
Conclusion
Most of the senior citizens are unemployed (73.65%) Notel . They are depending heavily on their family. Both State and Central Government should take more steps regarding their health and social security. In West Bengal large number of senior citizens in Urban area are not satisfied in present health system. They mostly visit private doctor's chamber (78%) Notel as they are not getting proper medicare in Government Hospitals. To provide for compulsory maintenance, protection and welfare of senior citizens, “The Senior Citizens (Maintenance, Protection and Welfare) Bill, 2006, has already been placed in the Rajya Sabha on 3 rd March, 2006. On the 15 th June, 2007, “National Council on Older Persons” have been convened a meeting to discuss on this bill. This bill contains provisions on medical facilities for senior citizens, it is also important to ensure that their appropriate health insurance schemes are available to the senior citizens. Last year the National Insurance Company came up with Varishtha Mediclaim policy for the senior citizens but their premium is high. This Premium on Medical Insurance is to be reduced. More stress to be given to indirect tax benefits specially tax on medicine which is generally used by senior citizen. But still it is good to notice that majority of our senior citizens receive respect from their families (42.28% extremely and 35.86% moderately) Notel and reported their health care needs are met adequately (65.17) Notel . The number of older persons in the population is expected to increase by more than double from 71 million in 2001 to 173 million in 2026, an increase in their share to the total population from 6.9% to 12.4%. Availability of medical facilities, better quality of life and increased nutrition intake has contributed to this phenomenon on demographic aging. Presently ageing has become a major social challenge and there is a need to give more attention to the care and protection for the older person. All we hope government will take more initiative for the betterment of senior citizen.
Acknowledgement
I expressed gratitude to Dr. Dilip Chakraborty, Teacher-In-Charge, Netaji Nagar Day College for his help and guidance at every stage of this work.
References
• Recent Trend in Geriatric and Gerontological Studies (2006); Published by NNDCC
• http://sodaljustice.nic.m/social/sdcop/benefits.htm
• http://socialjustice.nic.in/social/sdcop/opersons.htm
• http:// www.nationalinsuranceindia.com
• http://www.thehindu.com
• http://www.nhborg.in
Note 1
• Highlight of the survey report made by a group formed with representatives from teachers, non-teaching staff and students from Netaji Nagar Day College and Computer Centre under the leadership of Dilip Kumar Chakraborty in 2003-2004 through out West Bengal on different social, economic, health status. This group interviewed 3570 elderly persons residing in the urban areas in West Bengal .
• 27.5% of the senior citizen is above 75 years.
• 51% had yearly household income below 30,000
• 45.06% do not receive any cash benefits.
• 73.65% are either unemployed or retired.
• 29.82% reported that their health is poor and 41.36% reported their health as fair
• The most common problems are hypertension with heart problems, walking and vision problem, blood sugar and diabetes, back pain etc. The top three health problems are hypertension with heart problem, vision and walking problem and blood sugar with diabetes.
• 52.49% are depressed,
• 78% visited the doctor's chamber, 14.85% visited hospital and 3.6% visited other health care setting
• 66.28% prefer allopathic, 20.85% prefer homeopathy and 1.14% prefer Ayurvedic.
• 66.96% are concerned about their healthy diet.
• 28.17% reported that they are currently smoking and 11.6% reported they smoked in the past.
• Only 2.2% drink alcohol on a regular basis.
• 13.29% took medication frequently, 46.82% took medication on a regular basis, 38.15% took medicine as advised by the doctor and 1.73% did not take medication,
• Regarding overall satisfaction with health care in West Bengal 1.30% reported excellent, 23.52% reported very well, 34.31% reported fair and 40.84% reported badly.
• Regarding life satisfaction 55.49% expressed that they are satisfied in the life they had spent,
• Regarding respect received from family 42.28% reported they are treated extremely respectfully, 35.86% treated moderately, 2.86% treated slightly, 12.87% treated quite a bit and 7.14% felt that their family neglected them,
• 65.71% reported that their health care needs were met adequately.
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