The Hindu Business Line : I-T limit may go up for 65-plus

THE Kelkar panel on direct taxes is set to go soft on senior citizens in its final report by proposing a higher exemption limit and waiver from filing income-tax returns for those falling within the exemption limit.

According to official sources, the panel is likely to recommend an exemption limit of Rs 1,20,000 per annum for senior citizens instead of Rs 1,00,000 per annum proposed in the consultation paper for all individuals and HUFs. The generalised exemption limit now is Rs 50,000 per annum.

Currently, a senior citizen with an annual income of Rs 1,30,000 is exempt from tax in view of the tax rebate of Rs 15,000 available to him under Section 88 B of the I-T Act. The assessee is, however, required to file a return of income.

The consultation paper had recommended elimination of the tax rebate available to senior citizens (of 65 years and above). The final report, while retaining the recommendation to withdraw the tax rebate, is set to propose a generalised exemption limit of Rs 1,20,000 per annum for this segment. This would obviate the need for senior citizens to file their tax return (presuming that the one-by-six scheme would not apply to them).

The move would also help ward off criticism from within the BJP-led coalition on the Kelkar Committee's recommendations as being harsh on senior citizens. It would also be consistent with prevailing international practices.

In its consultation paper, the panel had suggested withdrawing the deduction under Section 80DDB (for medical expenses) except for senior citizens.

This segment would be eligible for a tax rebate of 20 per cent of medical expenses subject to a ceiling of Rs 4,000, according to the committee.

The panel is weighing the pros and cons of recommending a lower tax rate of 10 per cent (instead of the originally proposed 20 per cent) for assessees whose annual taxable income fall in the Rs 1 lakh - Rs 2 lakh slab to offset the impact of withdrawal of tax rebates.

It is also in favour of retaining its controversial recommendation to withdraw or phase out the 100 per cent tax-holiday extended to profits made by corporates that have invested in power, telecom and other projects under Section 80 IA and 80 IB of the Income-Tax Act, according to officials.

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