The budget was tabled on 1 February 2018, and it encompasses several changes that help you improve upon your personal finances. The changes discussed by the Finance Minister provide many ways in which you can save tax, whether you are a senior citizen or a salaried individual. So, make sure that you benefit from the new budget by understanding the revisions, and planning and assessing your savings and investments.
Here’s an overview of how this year’s budget will help you save tax in the coming years.
Increase in standard deduction to Rs. 40,000
This year’s budget has introduced a standard deduction of Rs. 40,000 for every salaried individual. You can claim this deduction as your yearly medical and transport allowance. Earlier you were allowed to claim Rs.19,200 and Rs.15,000 towards medical and transport allowance respectively, per year. Besides, you had to file for these amounts separately.
This year’s budget clubs the two, and increases the limit by Rs.5,800, bringing the limit up to Rs.40,000. This will simplify the tax filing process and require you to submit fewer documents.
Increase in tax deduction for senior citizens’ interest earnings
Until this year, as a senior citizen, you had to pay tax on interest earnings if the amount crossed Rs.10,000. Now, this amount has been increased to Rs.50,000. This is applicable to interest that you earn on recurring deposits, bank fixed deposits and post offices schemes, amongst others. So, you can enjoy greater returns on your investments by making use of the higher tax breaks.
If you are looking to invest in a FD (Fixed Deposit), pick one from Bajaj Finance. As a senior citizen, you will get an interest of 8.2% on your fixed deposit, along with benefits such as assured returns, good credibility rating and a flexible tenor.
Increase in Section 80D limit for senior citizens
Until now, expenditure on health insurance premium was subject to a tax deduction of Rs. 30,000, under Section 80D, for senior citizens. With this year’s budget, the government has considered higher consultation and hospitalisation charges, as well as rising treatment charges, which has increased the premium amount for your health insurance.
As a result, it has increased the tax deduction limit accordingly. Now, you can claim up to Rs.50,000 as a deduction. If you pay the premium for your parents, you can claim an additional benefit of Rs.20,000 according to this adjustment.
Invest more in the Pradhan Mantri Vaya Vandana Yojana
This year, the budget consists of revisions that boost the investment income of senior citizens. Now, you can invest up to Rs.15 lakh in the Pradhan Mantri Vaya Vandana Yojana, as compared to the earlier limit of Rs.7.5 lakh. Besides, the deadline for investment has been extended, and so, you can invest up to 2020.
Moreover, your investment under this scheme will give you a high rate return of 8% to 8.3%, depending on whether you choose monthly or annual payouts.
These new alterations will help reduce your tax liability in the near future. With support from the government, you can now strengthen your savings and investments.