While speculation is rife that Finance Minister Nirmala Sitharaman might offer a few tax benefits such as raising the standard deduction limit from the current Rs 50,000, discussions are veering around how she can facilitate retirement planning for Indians as July 23, the day when she will present the budget for FY25 is drawing near.
Significance of retirement planning
The importance of retirement planning lies in the fact that it concerns people in their most financially insecure years.
NPS (National Pension Scheme) is gaining traction quickly as a retirement tool. Experts have suggested that the tax-free withdrawal limit at the time of maturity be raised from the current level of 60%.
Budget expectations: Raising Section 80C limit
Section 80C is a bible for retirement planners. Personal finance strategists such as Nilanjan Dey, director, Wishlist Capital says that the limit under this section was last raised in 2014 and could be easily raised from Rs 1.5 lakh to Rs 2.5 lakh.
This will incentivise a lot of people to save in long-term instruments such as NPS or PPF (Public Provident Fund) or even ELSS (Equity Linked Savings Scheme).
Women-centric retirement incentive
In keeping with the focus on women, the finance minister can also think of certain relaxations, especially for women. “If we can have Sukanya Samriddhi Yojana and Mahila Samman Savings Certificate, there is no reason why women can’t be given a bit of special treatment for planning for their golden years,” remarked Nilanjan Dey, director, Wishlist Capital and an expert on retirement planning.
Extra for senior citizens
Senior citizens are usually offered a higher interest rate of 50 basis points on FDs by different banks. This could be raised by a few basis points more.
Section 80CCD(1B) benefit
Deduction under Section 80CCD(1B) offers additional deduction of up to Rs 50,000 for contributions made to NPS over and above the deductions available under Section 80CCD(1). This could be raised, think some experts.
To push youths
Ashish Aggarwal, Director, Acube Ventures has suggested that a special incentive can be offered for investors under 35 who would put their money in long-term retirement products. This could provide a fillip to retirement planning from an early age.
New bonds for retirement
Another suggestion is the introduction of a special category of government bonds for retirement savings that could be linked to inflation.
Special campaign for retirement planning
The finance minister can also think of a special drive to raise awareness of retirement planning among youths by launching a campaign similar to “Mutual Funds Sahi Hai.” It can push a huge number of people towards a practice that most are aware but not many adopt.
The significance of retirement planning is increasing as financial uncertainty rises in the modern world. There are several ways in which Finance Minister Nirmala Sitharaman can help in the quest. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
