The Union Budget this year had quite a bit of sops for women as well as senior citizens. Here’s an overview. #unionbudget2018 #womenempowerment #investments #savings
A lot was expected from the Union Budget this year and the government has managed to satisfy the citizens of our country to the best of its ability. The most impressive sops include the benefits earmarked for women alone. The benefits for senior citizens are also good. Here are some of the benefits that will have a long-standing impact.
Join the workforce
The number of women in India joining the workforce has gone up over the past decade. As of 2017, 27% of the labour force in India compromised of women. Looks great! However, a report by World Bank says that India at rank 120 has the lowest female participation in the world. The government’s initiative as regards the Employee Provident Fund (EPF) should help. In the budget, the government said that women need to contribute just 8% (instead of 12%) towards their EPF in the first 3 years. The employer contribution will remain as it is. This will ensure that take-home pay for women is higher.
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Get those loans
Women Self-Help Groups (SHG) have been doing extremely well. What are SHGs? These are voluntary associations of women or men in similar economic conditions. They gather capital to start lending to others on their own. Some SHGs are linked to banks’ micro-credit wings. SHGs have grown at 37% last year. In the budget, the govt. has said that loans to these SHGs will increase to Rs. 75,000 crore by March 2019.
Another important development is regarding the Mudra Loans. These are loans provided for the self-employed. 78% of beneficiaries under the Mudra Loan scheme are women. In the budget, the government said it will increase the target under Mudra Loans to Rs. 3 lakh crore. This will help all those women who are on their own to fund their business.
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For senior citizens, the government has increased the exemption limit for interest on bank and post office Fixed Deposits from Rs. 10,000 to Rs. 50,000. This can be looked at as a big benefit because most elderly people only invest in these deposits. The best part is that they don’t need to pay Tax Deducted at Source (TDS) for interest from Fixed Deposits and Recurring Deposits.
Tax deduction for Health Insurance premium under Section 80D has been hiked from Rs. 30,000 to Rs. 50,000. The deduction for critical illness under Section 80DDB has also been increased to Rs. 1 lakh from Rs. 60,000 for senior citizens and Rs. 80,000 for super seniors.
Additional Reading: How Senior Citizens Can Save & Invest Better With Mutual funds
Another good thing is that pensioners can also claim the standard deduction of Rs. 40,000 that is applicable to the salaried class. The Central Board of Direct Taxes Chief Sushil Chandra has clarified that documents or bills are not needed to claim this deduction. How much can an average senior citizen save considering all these benefits? Suppose a senior citizen is earning Rs. 7 lakhs per year. Earlier, if they claimed deductions under Sections 80C, 80D and 80DDB, they would have paid taxes of around Rs. 12,000. With the new benefits, the tax will be only about Rs. 5,000. Isn’t that a good thing?
It is best to start planning your taxes early on in the year so that you don’t forget to include these deductions that have been introduced. The earlier you plan, the easier it will be to determine how much taxes you will need to pay. And don’t drop tax-saving Mutual Funds from your list. Even with the long term capital gains tax of 10% for equity Mutual Funds, you can get good returns from them in the long run.
This article was originally published on LinkedIn.