'There are no new benefits for senior citizens, but on the other hand senior citizens having sizeable dividend income may have to suffer tax at applicable slab rates,' says Mahesh Padmanabhan.
In an online chat with Rediff.com readers, Mahesh Padmanabhan answered their post-budget tax queries.
The unedited chat transcript:
Mahesh Padmanabhan: Good Afternoon Friends welcome to the budget chat session with relevance to salary taxation.
Manager NEEPCO: Dear Sir If my salary per annum is 30L with housing loan of 30L. Which tax option i have to choose old or new?
Mahesh Padmanabhan: You would be better to go with the old regime in your case if you have substantial tax investments.
Rakesh Kumar Agrawal: Dear Sir, I am a central govt. employee recruited prior to 2004 and wish to remain in old IT regime. Am I eligible to invest in NPS and claim deduction of 50K in addition to 1.5L under section 80C? Is there any restriction on contribution in NPS for govt. employee recruited before 2004? Kindly clarify
Mahesh Padmanabhan: Yes you may invest in the same.
Veera Raghavan: Is there is any exemption under Section 80C, 80D, etc. in the budget 2020?
Mahesh Padmanabhan: In case you opt for the old tax regime, all these benefits will be available.
Venkat Subramanian: Sir, it looks like the senior citizens benefit of Nil Slab upto Rs. 5L has been removed in the new scheme. I have rent income from properties for which I used to get deductions of some 30%. Is that deduction still available?
Mahesh Padmanabhan: You will get standard deduction benefit as it is not covered in the exclusion list.
Sumeet Salgaonkar: Dear Mahesh, I am confused about saving tax. I have started earning from last two years and fall in the Rs 5 to 7.5 lacs bracket. I do not have home loan but plan to buy one in a year or so. I have other 80c and 80ccd exemption. Can you please let me know how i can save more?
Mahesh Padmanabhan: India does not have a social security system hence it is upto you to take care of yourself in advanced age. Do not look at tax savings as the criteria for investment and regardless of the tax benefit being available or not keep investing.
Aakash Singla: Whether NPS deduction of 50000 is available under new regime for common citizens?
Mahesh Padmanabhan: Yes if you opt for the old tax regime.
Anirudh Karthik: What benefits does this budget have for retired people and senior citizens?
Mahesh Padmanabhan: There are no new benefits for the senior citizen but on the other hand senior citizen having sizeable dividend income may have to suffer tax at applicable slab rates.
ramesh panditaradhya: Please list out exemptions that can be availed and that cannot be availed for Computing Salary under new budget 2020 so as to avail tax benefit.
Mahesh Padmanabhan: In case you are choosing the new regime of tax then the following would not be available: HRA, Profession tax deduction, Standard Deduction, Mediclaim, Donation, all 80C, 80CCC house loan interest.
Debaraj Choudhury: I am a salaried person with Taxable income of 35 lakh. I am availing the deduction under Sec 80c (1.5 L), 50000 T under NPS and 25000 under 80D (health Insurance). I don't have house loan exemption. Now, which Tax system will be better for me: Old or New? Kindly guide me. Thanks.
Mahesh Padmanabhan: New regime would save you about Rs. 7800 more in tax
ramesh panditaradhya: Whether we can avail standard deduction of Rs 50000 and Professional Tax of Rs 2500 and don't avail other deductions like 80 C, 80 D, House Loan Interest etc.
Mahesh Padmanabhan: In case you choose the new regime, you cannot use these deductions.
amarendra joshi: Hi. My CTC is approximately 15 Lacs. Which regime do I choose? Old one or the new one?
Mahesh Padmanabhan: Would depend on the investments you make.
swatantra dubey: Is provident fund, voluntary provident fund and pension scheme deposits exempted under new tax slab?
Mahesh Padmanabhan: If you meant, these deductions were not available if you choose the new tax regime then you are correct.
Ravinder singh: I am Sr. Citizen having monthly pension and bank interest totalling to around Rs.8.50 lac. My savings are Rs.1.50 lac under 80C and mediclaim policy with premium of Rs.40000. Should I opt for new tax regime or continue in old scheme? Is in new regime mcp and interest on fd also disallowed?
Mahesh Padmanabhan: Old regime would be good to you Sir. You would save Rs. 10920 by choosing old regime.
Rajendraprasad: HI, I am senior citizen. I have no investment. There is confusion will I require to pay IT on income between 2.5 to 5 lakhs,. What other IT deduction I can claim
Mahesh Padmanabhan: If your income is Rs. 5 Lakhs or less than your tax outgo will be nil.
Venkat Subramanian: Sir, My mother is govt. pensioner. If her annual pension crosses Rs 5L, she will be taxed in the new scheme. How can we avoid TDS for her? She is 87
Mahesh Padmanabhan: Her tax liability is anyways in zero tax brackets so i don't think the government would be applying TDS.
AUM: Sr citizens like me have sizeable income in the form of dividends from MFs. I can take dividend of M F up 31st March 2020 & then I will be compelled to convert the MFs into Growth option. This way I may be able to save tax on MF dividends for next year. But my income in hand will go down considerably & hence my spending power will go down considerably. Any better solution I can adapt.
Mahesh Padmanabhan: Sir, the taxability would depend on the size of dividend income you used to earn. You could checkout the tax amount and then take a call on converting it into growth option.
Nabhojit Panigrahi: Good Afternoon. I have a Gross Salary Of Rs.720000/- Per annum. I Had Purchased A House Jointly With My Mother Myself Availing Home Loan. Should I Stick To The Old Regime Or Shift To New Tax Slab? Regards.
Mahesh Padmanabhan: Hi am assuming that you don't have any other deductions and considering a home loan interest of Rs. 2 Lakhs, old regime looks good as you may end up saving about Rs. 18720 in tax using the old regime.
Mahesh Padmanabhan is principal advisor -- direct taxes group, RelaxWithTax Consultants Pvt Ltd, a Mumbai-based personal taxation and finance solutions provider.