The Hindu : National : `Senior citizens hit hard by budget proposals'

Online edition of India's National Newspaper
Tuesday, Mar 22, 2005

National

National

`Senior citizens hit hard by budget proposals'

By S. Rajaratnam

CHENNAI, MARCH 21 . The Hindu has been receiving a number of letters from senior citizens questioning the statement of the Finance Minister that everyone gains from his budget proposals. Senior citizens feel that they have been let down. Our tax consultant has replied to one of the letters.

Question: Pensioners, who are senior citizens, have been badly hit by Mr. Chidambaram's budget, with the removal of tax concessions under Section 80L and 88B. Similar is the case of women, on account of the removal of Section 88C. A vast majority of the pensioners, whose annual income is below Rs. 2 lakhs live on their pension and interest income. They cannot afford long-term investments in NSCs or insurance to avail tax benefits as they are more concerned about their monthly income to meet their daily needs.

I have given the tax liability of senior citizens with an annual income of Rs. 2 lakhs, including pension now and under the proposed budget [see graphics].

This means senior citizens will have to pay Rs. 8,600 more tax under the new budget. Similarly, women will lose tax benefit of Rs. 2,500 in the 30 per cent bracket. Is it not a cruel joke on the old and the weak?

I agree that the Budget gives more tax benefits to businessmen, professionals and the higher-income group. But Mr. Chidambaram, is it right to take away the meagre benefits given earlier to the middle and lower-income groups? Hope you will restore these benefits by raising the exemption limit to Rs.1.5 lakhs for women and Rs. 2 lakhs for senior citizens.

Answer: Many readers have pointed out this discrimination against senior citizens. Many more illustrations have been given. Questions are asked as to whether the Finance Minister believes that senior citizens have been over-indulged and pampered in the past and whether he considers it necessary to "discipline them." As indicated in the Tax Forum column the substitution of higher exemption limit as against the tax rebate of Rs. 20,000 puts senior citizens in a worse position. Those senior citizens, who benefit from Section 80L up to Rs. 12,000/15,000 and those pensioners, who are eligible for standard deduction are the worst hit, because for them it is not a mere reduction in the benefit as senior citizens, but also forfeiture of two other deductions imposing additional liability, which, as pointed out by the reader in the letter, is Rs. 8,600. There is an even larger liability for some others. The consolation that is offered is that they can neutralise the loss by putting aside a part of their income in tax-oriented savings scheme under Section 80C. They may have to invest a larger amount. But the universal reaction from senior citizens is to ask why they should save in the sunset years of their life? And for whom should they save? It is difficult to answer the complaints of senior citizens in this regard. It is the Finance Minister, who can give an answer by restoring what his predecessors had granted for this section of the community in distress.

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