With the Union Budget 2025 set to be presented by Finance Minister Nirmala Sitharaman on February 1, senior citizens are eagerly anticipating potential tax relief measures and improved interest rates on savings schemes.
"Finance Ministers over the years have ensured that senior citizens have access to a savings instrument that offers returns above market rates, long-term stability, and minimal risk," an industry expert noted.
Key Expectations for Senior Citizens in Budget 2025
1. Lower Age Limit for Exemption from Tax Filing
Under the current tax regime, senior citizens aged 75 or above are exempt from filing income tax returns if their income comes solely from pension and interest earned from the same specified bank where their pension is deposited. In such cases, the bank deducts tax at source (TDS), removing the need for manual tax filing.
Experts suggest that reducing this age threshold to 70 years could extend this benefit to a wider segment of retirees, easing compliance burdens for senior taxpayers.
2. Increase in Basic Exemption Limit
Another major demand is an increase in the basic exemption limit under the new tax regime, currently set at Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens (80+ years) under the old regime.
"A revision of the basic exemption limit from Rs 3 lakh to Rs 5 lakh under the new tax regime, alongside enhanced deductions and HRA benefits for metro city residents, would provide significant relief," an industry expert said.
Some tax professionals have even suggested a Rs 10 lakh exemption limit, recognizing that many retirees rely on fixed incomes from pensions and savings with limited earning potential.
3. Tax Exemption on Senior Citizens' Savings Scheme (SCSS), 2024
To reduce financial stress on elderly citizens, the government may introduce tax exemptions or deductions on interest earned under the Senior Citizens Savings Scheme (SCSS), 2024.
"Higher interest rates on senior savings schemes like SCSS could make them more attractive investment options for retirees," a tax expert commented.
Budget 2025: A Crucial Moment for Senior Citizens
As living costs rise, tax exemptions, higher savings returns, and simplified compliance could provide crucial financial relief for senior citizens. If the Union Budget 2025 delivers on these expectations, it could significantly enhance retirement security and financial independence for India’s aging population.
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