Senior citizens are hoping for a simpler tax structure, with higher basic exemption limits, higher deductions for health insurance, and measures to protect themselves from the effects of inflation.
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Budget Senior Citizens 2026: This year, the government’s focus in the Union Budget may be on senior citizens. Last year, Finance Minister Nirmala Sitharaman focused on middle-class taxpayers. This time, Sitharaman is expected to announce increased tax benefits on NPS and a health scheme with greater coverage for the elderly. Sitharaman will present the Union Budget for the next financial year on February 1 at 11 am.
Expectations for a simpler tax structure
Rajarshi Dasgupta, Executive Director (Tax) at Aquilaw, said, “Senior citizens are expecting a simpler tax structure. They want a higher basic exemption limit, more deductions for health insurance, and measures to protect against the effects of inflation.” Analysts say that under the Income Tax Act, various deductions are available for those over 60. Despite this, the increase in the basic exemption limit in the Union Budget will provide significant relief to the elderly.
The deduction limit on interest income will be increased.
Under Section 80TTB of the Income Tax Act, individuals aged 60 to 80 are allowed to claim a deduction on interest income up to Rs 50,000 from savings and fixed deposits. Analysts say this deduction limit should be increased in the Union Budget 2026. This deduction is available only under the old income tax regime. Under Section 80D, the deduction limit on health policies for senior citizens for the treatment of critical illnesses should be increased. TCS and TDS rates should also be reduced.
Rebate on capital gains should also be allowed under Section 87A.
Analysts say that many senior citizens earn passive income in the form of capital gains. However, profits from capital gains are not eligible for rebate under Section 87A. Kunal Savani, partner, Cyril Amarchand Mangaldas, said, “It is expected that the government will give the benefit of rebate under Section 87A to senior citizens on such profits from capital gains.”
Higher deductions for senior citizens on health policies
Tax benefits on NPS also need to be increased. Currently, deductions for NPS are allowed under Section 80CCD in both the new and old income tax regimes. Vishwajeet Goyal, head of PensionBazaar, the retirement planning arm of PB Fintech, said, “If tax benefits on NPS are increased in the new income tax regime as well, it will boost long-term retirement savings.” Experts also say that the current deduction limit for senior citizens on health policies is very low and needs to be increased soon.
