New Delhi: With Union Budget 2018 round the corner, expectations regarding tax relief and changes in section 80C (income tax) are starting to rise.
In a country with unequal wealth, things like social security, healthcare and insurance need to be secured with the help of tax laws. Changes are needed in tax deductions on medical insurance and the National Pension Scheme, a move which will encourage investments.
Chartered accountant Chitkala Kulkarni is reluctant to spend money on medical insurance. Medical costs are high and insurance a must. But the tax deductions allowed on medical insurance premiums under Section 80D is capped at 25,000 rupees. This gives no incentive to the tax payer.
“It’s more cost effective to invest in other schemes, and use the returns to cover her medical expenses when they arise,” she says.
“I live in a family of six, which has three generations living together. Considering this, what is the point of taking a medical insurance where you are paying Rs 70,000 or so every year just anticipating an illness? Instead, we save that money, invest it elsewhere so that by the end of it we are still able to fund it on a personal level,” Chitkala added.
Medical insurance premiums for senior citizens are high. But here too, the deduction allowed is just Rs 30,000. In an age group where insurance is a necessity, not a luxury, it’s just not enough.
“Senior citizens requiring medical care will only increase from now on. Today, a medical insurance for Rs 3-5 lakh for a senior citizen easily carries a premium of Rs 50 to 80 thousand, especially if the person is above the age of 80. Considering that they get a deduction of only Rs 30,000 in income tax return, maybe the Finance Minister should see whether his budget can accommodate giving the senior and super senior citizens a higher amount as deduction,” said the chartered accountant.
The national pension scheme was introduced by the government as a safety net, yet it needs requires more incentives. The tax deduction under NPS differs for salaried and self-employed tax payers. The additional deduction allowed for the national pension scheme, under section 80 CCD, is Rs 50,000. A 50% increase in the number required at the least.
Assistant cardiologist, Tishilja says, “I request the Finance Minister to increase the exemption in tax from Rs 25,000 to at least Rs 50,000. For senior citizens, it should be between Rs 30,000 to Rs 80,000. I would also request Arun Jaitley to hike the tax reduction from NPS contribution from Rs 50,000 to Rs 75,000 as an additional tax deduction under 80CCD.”
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