2 min read.Updated: 20 Jan 2022, 12:56 PM IST Edited By Sangeeta Ojha
SBI Research report also suggests medical savings account and no GST on health insurance
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SBI Research has suggested the Government should promote savings by increasing the tax exemption for senior citizens to ₹1 lakh. Currently, under Section 80TTB, senior citizens enjoy tax exemption on interest income up to ₹50,000 from the Senior Citizens Savings Scheme (SCSS), bank fixed deposits (FD) and recurring deposits (RD).
The report titled 'Fiscal deficit for FY23 could be in the lower end of 6-6.5%: Gross borrowings of Centre at Rs. 12 lakh crore has been authored by Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.
“Rationalise existing taxation structure on contractual savings to promote savings, At current savings are the financing of growth is not possible beyond the potential growth of 6%," SBI Research said:
“Under 80TTB interest income from deposits by senior citizens (Savings bank accounts, fixed deposits, recurring deposit accounts) up to ₹50,000 is exempted from income tax. This threshold may be increased to ₹1 lakh which will have a fiscal cost of only ₹2000 crore (around 7 bps FD)," SBI Research said in its latest Ecowrap report.
SBI Research also recommended medical savings account wherein a part of the advance tax could go to Mediclaim policy.
“Medical Savings account wherein a part of the advance tax goes to Mediclaim policy – thus enabling customers to take advantage of EMIS. A scheme to deduct Interest from Savings Account and pay towards the Mediclaim policy can be thought of. The total no of savings bank accounts in India is 130 crore (excluding the Jan Dhan accounts who are possibly covered in Ayushman Bharat). If we take the average balance in such amount ( ₹1215) as the insurance amount, the account holder can get up to ₹50,000 as annual insurance cover that can be even tweaked to include medical expenses," it added." the report said.
The report further said that the Government should consider exempting health insurance products from GST, at least for all retail and health-focused products. “At a time when Governments are grappling with pandemic scenarios, they can look at making Health insurance more affordable.
Section 80TTB of the Income Tax law gallows tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount up to ₹50,000 earned by the senior citizen. Both the interest earned on saving deposits and fixed deposits are eligible for deduction under this provision.