Savings scheme

Savings scheme for seniors in FD, RD: Rs 1 lakh Section 80TTB benefit – SBI Research suggests

Budget 2022 Expectations for the Elderly: SBI Research suggests tax exemption of Rs1 lakh for the elderly under Section 80TTB.

Expectations of the 2022 budget for seniors: SBI Research has suggested that the government should promote savings by increasing the tax exemption for the elderly under Section 80TTB to Rs 1 lakh. Currently, under this section, the elderly enjoy tax exemption on interest income up to Rs 50,000 from various savings accounts including the Savings Scheme for the Elderly (SCSS ), fixed bank deposits and recurring deposits.

In its latest “Ecowrap” report, SBI Research said: “Interest income below TTB 80 from senior citizens deposits (savings bank accounts, fixed deposits, recurring deposit accounts) up to Rs 50,000 are exempt from income tax.This threshold can be increased to Rs 1,00,000, which will have a tax cost of only Rs 2,000 crore (about 7 bps FD).

Previously, the Institute of Chartered Accountants of India (ICAI) recommended the government to include interest income from the National Savings Certificate under Section 80TTB.

Medical savings account

SBI Research also recommended that the government provide a medical savings account in which part of the withholding tax could be earmarked for the Mediclaim policy. Or, a system to deduct interest from the savings account and pay for mediclaim can also be considered, he said.

READ ALSO | Will NSC interest income up to Rs 50,000 become tax exempt under section 80TTB?

“Medical savings account in which a portion of withholding tax is paid back to the Mediclaim policy – ​​allowing clients to take advantage of EMIS. A system to deduct interest from the savings account and pay for the Mediclaim policy can be considered,” recommended SBI Research.

“The total number of savings bank accounts in India is 130 crore (excluding Jan Dhan accounts which are possibly covered by Ayushman Bharat). If we take the average balance of such amount (Rs 1215) as insurance amount, the account holder can get up to Rs 50,000 as annual insurance coverage which can even be amended to include medical expenses,” he added.

No GST on health insurance

The Ecowrap report also recommended that the government consider exempting health insurance products from GST, at least for all retail and health-oriented products. “At a time when governments are grappling with pandemic scenarios, they may consider making health insurance more affordable,” he said.

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