Budget 2025-26 for Senior Citizens: In the Economic Survey 2024-25 presented a day earlier, it was told that even after combining the National Pension Scheme and Atal Pension Yojana, only 5.3% of the population in India comes under pension cover.
Finance Minister Nirmala Sitharaman has announced several concessions for senior citizens while presenting the Budget 2025-26. From income tax deduction to withdrawal in savings schemes, many rules have been changed. Before the budget, the Finance Minister was being requested that in view of the rising inflation rate, steps should be taken in the budget to ensure financial security of senior citizens.
Announcement of creating a new forum
The Finance Minister said in his speech that a platform would be set up for regulatory coordination and development of pension products. In the Economic Survey 2024-25 presented a day earlier, it was told that even after combining the National Pension Scheme and Atal Pension Yojana, only 5.3% of the population in India comes under pension cover. In such a situation, efforts are necessary to reach pension products to more and more people, especially the youth.
Tax relief to senior citizens
Giving tax relief to senior citizens, Sitharaman has announced that the limit of tax deduction on interest for them is being doubled from the current ₹ 50,000 to ₹ 1 lakh.
In the financial year 2024-25, the basic exemption limit was raised to ₹ 3 lakh per annum for senior citizens in both the new and old tax system, while for very senior citizens (above the age of 80 years) the limit was raised to ₹ 5 lakh per annum. However, this was done only in the old tax system.
Pension Scheme
Many senior and very senior citizens have very old National Pension Scheme (NPS) accounts. Since such accounts no longer earn interest, the government has proposed to exempt withdrawals made by individuals from the National Savings Scheme (NSS) on or after August 29, 2024.
The government has also proposed to allow the same tax treatment for NPS Vatsalya accounts as is available for normal NPS accounts, subject to overall limits.
Need to increase pension cover: Economic Survey
According to the Economic Survey released a day earlier, the pension sector in the country has grown rapidly since the introduction of the National Pension System (NPS) and Atal Pension Yojana (APY). The total number of subscribers reached 783.4 lakh in September 2024. However, only 5.3% of the total population comes under pension schemes, including NPS and APY.
It is worth noting that 93.7% of APY accounts have an amount of ₹ 1,000 every month while only 3.7% have an amount of ₹ 5,000. This is because the income of the families associated with pension schemes is low and the income is spent on meeting the needs instead of saving.
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