Seniors Citizens Who Have An Income

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DTC Springs Nasty Surprise on Seniors Who have an Income

The direct tax code has brought about tremendous changes all over the taxation administration including filling up places of loop holes that existed earlier. The direct tax code or DTC is expected to be in action from 1st April, 2012. The direct tax code has got the senior citizens into a very unpleasant condition as not only the DTC has removed the rebate facility which is being enjoyed by the senior citizens right now but also has snatched away the facility of investment of income in tax-saving investments. The later part has not been noticed for a while but no doubt, it is going to create as chaos later on.

Most of the people and earlier tax provisions believed that the income from work ends at the time of retirement, but the same is not true as most of the retired persons do earn a significant amount of income even after retirement by way of part time and irregular work, added to it, most of the retired persons earn by way of rent.  Later on, these incomes were invested with a view to claim deduction or exemption under section 80C like investment in ULIPs, ELSS Mutual Funds, etc. Thus, DTC has made use of this concept and has taken a step for taxability of income of the senior citizens.

Senior citizens prefer short term investment plans so that there can be flexibilities in their operation and they can withdraw money whenever felt necessary. But the DTC has completely knocked out the concept as now the senior citizens. They are only left with the option to invest in National Pension Scheme (NPS) and provident fund, as both of them retirement solutions. Added to it, they can also opt for PPFs which has a 15 years maturity period which is too long for them to invest in. This event can only lead to payment of taxes by the senior citizens or will lead them to invest in those channels which are unsuitable for them.

When asked from an experienced corporate employee, Mr. Nayak Saha, he said, “I don’t know how many seniors fit this profile, but there’s no reason that the DTC should give them a raw deal. The person who first pointed this out to me was a retired PSU employee in his mid-60s who earns a reasonable `5-7 lakh a year (though somewhat irregularly) as a project engineering consultant. I don’t know how many people are there who roughly have this profile, but there’s no reason to cut them off from tax-saving investments on top of taking away their tax-rebate.”

The situation has leaded to a very uncomfortable phase for the seniors as not only their rebate has been taken away, their investment options have also been taken away from them. This has lead to some very serious problems for the old aged persons as in the old age where compromise is the first thought, further burden has been put on them by withdrawing the various exemptions that were made available to them earlier.

Related posts:
1.     Direct Tax Code : Tax on Saving Withdrawals : EEE would be EET.
2.     Income Tax Exemption Limit Increased | Union Budget 2009 Taxation Highlights
3.     New Tax Code : 10% Tax upto Rs. 10 Lakh Income
4.     Direct Tax Code 2011 Cleared by Cabinet
5.     New Income Tax Slab under New Direct Tax Code 2009
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