Direct tax code may hit senior citizens

Sheilu Sreenivasan, founder president, Dignity Foundation, an NGO that works for the cause and care of the elderly, said "Our biggest worry is not what the government is going to give to senior citizens, but what it is going to take away from them."

"For instance, when the tax code comes into effect, then the senior citizens, who save for their old age, would be the worst affected as their income would be taxed as per EET (Exempt Exempt Tax), which means that while investing their income would not be taxed, but at the time of withdrawal, the income would be subject to taxation," he said.

"The government proposes to put a burden on senior citizens and pensioners. In the same way what it is going to NGOs is also frightening. The activities of charitable organizations would be taxed, which would discourage asset creation by them as the tax code proposes to charge non-profit organisations (NPOs) at 15 per cent" she added.

Sreenivasan also said, "The government should provide social security payments of Rs 1,000 a month for all the BPL and slightly above the BPL senior citizens, numbering approximately 50 million.

Sreenivasan suggestions the following:

Advance Tax: We hope that the Budget will exempt those with income under Rs 20 lakh, half of what is available for small businesses for Presumptive Tax, so as to pay income tax once and for all, at the end of the financial year. Elders very often shorten deposits for emergency related expenses and are unable to estimate year's income.

Tax Free Bonds: Interest rate to factor in the tax angle of average tax payer to be revenue neutral for the Government, so that senior citizens can choose to invest, even if interest is lower, and be free of Income Tax Returns.

Tax Deducted at Source: Senior citizens very often face moral dilemma on this score, as they tend to have all their savings in bank deposits and in a single bank and branch. Since tax is paid only on income beyond the basic exemption limit, deducting tax at source for the whole income leads to having to claim excess tax deducted, running into tens of thousands.

For example, when taxable income is Rs 300,000 and income tax, at present rates, comes to Rs 6,180, TDS will be Rs 30,900 and refund due becomes Rs 24,720! Why should we have to pay this huge claimable tax? So, do we submit Form 15H or not?

Date of Interest Payments: PSU Banks, unlike GOI Bonds and Senior Citizens Savings Scheme, credit quarterly interest on deposits dating from actual day of investment, but at the end of the year Form 16A, add an additional projected interest on March 31 and deduct tax at source on it, though interest is not actually credited. To claim refund of projected TDS, the depositor is first forced to pay tax on extra income not actually received.

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