Date:12/05/2008 URL: http://www.thehindu.com/2008/05/12/stories/2008051254681700.htm

Business

Tax incentives for senior citizens

I am a retired bank employee with hypertension and health problem but leading a fairly comfortable life. I am amused by the many questions senior citizens of 80 years and above pose as regards tax incentives for long-term investments like those covered by Sec. 80C or Senior Citizens Savings Scheme. The plight of the senior citizen to meet his medical expenses with his resources restricted for availing 80C deduction to avoid taxability in one of the letters by a reader past 80 years dealt with in your column with the answer that such medical expenses are not deductible, though health insurance premium is deductible. Senior citizens above 80 years have no need to save for their children by sacrificing their health needs or ordinary comfort by saving tax. They can live comfortably within their income and out of their past savings. There is no point in having money locked up in long-term investments to save tax. They can be happy with holidays, visits to relatives and the like keeping the spouse also happy. Even choice of a comfortable senior citizens’ home should be advisable. They must feel free to live on their present and past income even by paying a small price by way of tax without sacrificing their happiness. I hope that this is an angle you may not mind conveying to the seniors among the Senior Citizens.

The above letter from S. Santhanam is a short summary of his philosophy of life about the attitude to savings on the part of senior citizens.

The purpose of savings should not be lost sight of. Park’s Valuation would value life interest by life expectation of persons above the age of 60 years at five years and above 80 years at three years. Insurers sell policies by jacking up the price for risk for persons above 60 and do not sell at all for persons even below 80. The principle of reverse mortgage is based on the view that a person should be able to draw on his immovable property for liquidity to meet his personal expenses so that he is able to live in his home without having to sell it for his expenses and without having to depend upon his children at his old age.

The reader’s advice is that one may not try to save a small tax by availing Sec. 80C by sacrificing a comfortable life.

The attitude to tax savings should certainly take into consideration what the reader has advised.

Such advice will be relevant to a large number of seniors among the senior citizens. Tax saving should not become an obsession.

S. RAJARATNAM