You may now turn a senior citizen five years too soon. Budget 2007-08 is set to redefine senior citizens of the country by reducing their qualifying age to 60 from 65 for availing of tax exemptions.
This comes even as the finance ministry is working on a special package for the elderly. The move is in line with the governments proposed National Old Age Policy Bill, which is set to be introduced in Parliament shortly.
The finance ministry is toying with the proposal that has the backing of the ministry of social justice (MSJ), a source said. If the proposal goes through, it will bring considerable relief to a large number of citizens who have touched 60.
Senior citizens get an exemption of up to Rs 1,85,000 under the Income Tax Act against Rs 1,00,000 for others. The new definition will also mean that senior citizens will now be entitled to a higher interest on bank deposits (three years and above) on reaching 60 years.
While a lower qualifying age will expand the base for senior citizens, the government may also raise the TDS limit from Rs 5,000 to Rs 10,000 for income from interest on bank deposits.
The elderly, who do not come under the tax net, have to queue up at banks for their TDS certificates. Besides, it is looking at raising deduction against premium contribution to medical insurance from Rs 15,000 to Rs 20,000.
Insurance companies charge higher premiums to provide cover to those who have attained 60 years and thus there is a strong case to revisit the cap in line with the increase in medical costs.
The National Policy on Older Persons confers the status of senior citizen to a person who has attained 60 years. MSJ, which has proposed the policy, has asked all government departments and ministriesboth at the Centre and state levelto adopt this criterion. Finmin has taken cue from MSJs recommendation.