Super rich senior citizens hit hardest this budget

New Delhi: Individuals with an annual income of above Rs. 10 lakh but below Rs. 1 crore have emerged as the biggest beneficiaries of the new taxation proposals, if they are aged below 60 years, while the super-rich above this age bracket will be hit the hardest.

 Finance Minister Arun Jaitley
Finance Minister Arun Jaitley

As per an analysis of new income tax proposals, an individual aged below 60 years can make additional savings of up to Rs. 24,596 a year if his or her annual income is above Rs. 10 lakh but below Rs. 1 crore. For senior citizens in this income bracket, savings would be little lower at Rs. 21,630.

At the same time, senior citizens above 60 years of age would have to pay additional tax of Rs. 64,550 a year if their annual income is more than Rs. 1 crore.

For the individuals below 60 years of age with annual income of over Rs. 1 crore, the additional tax works out to a little lower at Rs. 61,271, according to an ‘impact report’ prepared by consultancy major PwC for the income tax proposals made by Finance Minister Arun Jaitley in his Budget on Saturday.

Mr Jaitley has announced increasing the super-rich surcharge to 12 per cent from 10 per cent for those individuals earning more than Rs. one crore. However, he has also proposed additional deductions in lieu of investments in pension and health insurance schemes.

The additional savings would be the lowest at Rs. 7,210 for senior citizens in the age bracket of 60-80 years and with annual income of below Rs. five lakh. For individuals below 60 years of age in this income bracket, the additional savings would be Rs. 8,199.

In case of annual income of Rs. 5-10 lakh, the additional savings would be Rs. 16,398 for individuals below 60 years, while the same would be Rs. 14,420 for senior citizens aged 60 years and above.

Under new proposals, further deductions of Rs. 50,000 a year would be allowed for contribution made to the National Pension Scheme. Deduction on mediclaim premium has been raised from Rs. 15,000 to Rs. 25,000, while that for senior citizen parents has been increased from Rs. 20,000 to Rs. 30,000.

A fresh deduction of Rs. 30,000 has been provided for the amount paid on account of medical expenditure incurred on health of a very senior citizen where no amount is paid towards mediclaim premium.

PwC India partner and leader-personal tax Kuldip Kumar said that “having raised the basic exemption limit and 80C limit last year, there was hardly any scope for further concession”.

“Raising the limit of health insurance premium, transport allowance exemption and additional deduction of 50,000 for NPS will help taxpayers save little more in taxes. However, super rich tax payers (having taxable income exceeding Rs. 1 crore) will have to shell out more due to increase in surcharge from 10 to 12 per cent.”

“Abolishment of wealth tax will give savings to those who are having taxable wealth. There is a greater focus in the budget on curbing of black money.”