Taxes have to be paid on annuity or pension received from NPS or other pension schemes.
Union Budget 2021 Expectations for Senior Citizens: Generally, the government definitely takes some steps to make a positive impact on the lives of senior citizens in the budget. Similarly, from the next budget 2021, there are expectations of senior citizens. The central government and central bank RBI have been keeping interest rates low for some time to ensure economic growth. Retired investors have suffered due to this. Most senior citizens make fixed income investments for their daily needs. Bank fixed deposits are the first choice of most senior citizens, who are currently getting interest at less than 6 percent. Apart from this, tax is also to be paid on the interest received from bank fixed deposits.
According to Colonel Sanjeev Govilla (Retd.), CEO, SEBI Registered Investment Advisor and Hum Fauji Initiatives, the fixed income scheme has sharply reduced interest rates for the last two years, causing loss to most senior citizens. According to Govila, the government should increase the exemption limit for interest income to senior citizens. Hum Fauji is a financial planning firm that provides financial services mainly to Armed Forces Officers and their families. Apart from this, Govila says about the annuity, the government should give tax relief on this.
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Demand to introduce special schemes for senior citizens
Senior citizens, especially retired people, require a fixed income to meet their daily needs. People 60 years of age and above choose a variety of investment options, although not all options give them regular interest. At the same time, some options earn regular income on the money deposited, such as bank fixed deposits, Pradhan Mantri Vaya Vandana Yojana (PMVVY), Post Office Monthly Income Scheme (POMIS), Senior Citizen Savings Scheme (SCSS), instant life insurance companies Annuity plans and floating rate saving bonds 2020. Interest on all these investments is taxable.
Raghunathan Parthasarathy, Associate Partner of Tax and Regulatory Services, BDO India, says there is no special pension or retirement plan for senior citizens, they have to meet their daily needs on the basis of their investment and interest from FDs. According to Parthasarathy, it should be expected from the government that it will start special schemes for senior citizens, which will give tax rebate on the income.
Demand to make annuity taxfree
Taxes have to be paid on annuity or pension received from NPS or other pension schemes. Though there is a tax exemption on the commuted amount (lump sum amount), the tax is to be paid on the annuity paid annually or annually. Due to this, senior citizens take a large amount of annuity amount at one time, due to which they have to face financial problems in their later age. Govila says that the government should give tax-free benefits on annuity.
