Budget 2024: Expansion of Ayushman Bharat Scheme and Enhanced Tax Benefits Expected

Ayushman Bharat Scheme Expansion

In a move that could significantly benefit senior citizens, the Modi government is expected to expand the coverage of the Ayushman Bharat Health Insurance Scheme in the upcoming Union Budget 2024-25, which Finance Minister Nirmala Sitharaman is set to present on July 23. Sources indicate that the scope of the scheme will be widened to include senior citizens above 70 years of age. This initiative aligns with the BJP’s manifesto promise to cover all senior citizens above this age under the flagship scheme.

Launched on September 23, 2018, by Prime Minister Narendra Modi, the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY) is the world’s largest health assurance scheme. It provides a health cover of Rs 5 lakhs per family per year for secondary and tertiary care hospitalisation. Currently, the scheme covers 50 crore people below the poverty line. The expansion to include those over 70 would significantly increase the penetration of health insurance in India, offering better healthcare access to a vulnerable demographic.

Introduction of National Health Claim Exchange

Additionally, the Finance Minister is expected to announce the launch of the National Health Claim Exchange (NHCX). This online platform aims to streamline the claim settlement process by bringing together insurance companies, hospitals, third-party administrators (TPAs), and policyholders. All health insurance claims made through NHCX will be cashless, simplifying the process for beneficiaries and ensuring quicker access to healthcare services.

Enhanced Tax Benefits for National Pension System (NPS)

The Union government introduced the National Pension System (NPS) to provide individuals with a pension income to support their needs in retirement. The NPS is regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA). Available to all Indian citizens between the ages of 18 and 70, NPS offers a flexible investment pattern with a mix of equity and debt exposure, making it a popular choice for retirement planning.

Currently, employees are eligible for a tax deduction of up to 10% of their salary (basic + DA) under Section 80CCD(1), within the overall limit of Rs 1.5 lakh under Section 80C. Additionally, contributions up to Rs 50,000 are eligible for an extra tax benefit under Section 80CCD(1B), which is over and above the deduction available under Section 80C. However, it is argued that the Rs 50,000 limit is insufficient considering rising living costs and longer life expectancies. They suggest increasing this limit to Rs 1 lakh to encourage more savings for retirement and provide better financial security for retirees.

Expectations for Housing Sector and Capital Gains Taxation

With the Union Budget 2024-25 approaching, expectations are high for announcements that will boost the housing sector and streamline capital gains taxation. Currently, any profit arising from the sale of immovable property is subject to capital gains tax. Exemptions are available if the property is held for more than 24 months (long term) and the proceeds are reinvested in a new residential house, used to purchase prescribed bonds, or deposited in the Capital Gain Account Scheme (CGAS) and subsequently used for construction or purchase of house property.

To alleviate procedural complications and encourage investment, the government may consider enhancing the exemption limit on reinvestment in house property from the current Rs 2 crore to a higher amount, reflecting the soaring prices in the housing sector. Simplifying the withdrawal process for CGAS and reducing the holding duration from three to two years could further ease compliance for taxpayers.

Investments in notified bonds up to Rs 50 lakh per financial year currently have a five-year lock-in period. Reducing this period and increasing the investment limit to Rs 2 crore could make this option more attractive for taxpayers, promoting infrastructure development. Additionally, introducing a taxable threshold for long-term capital gains from house property, along with slab rates similar to the US system, would benefit lower-income groups and one-time investors.

Streamlining Tax Deduction Processes

The tax deduction process for transactions between residents is relatively simple. However, if the seller is a non-resident, the buyer must obtain a Tax Deduction and Collection Account Number (TAN) and file a withholding statement. Simplifying this process to match the ease of transactions between residents, where taxes can be deposited using the Permanent Account Number (PAN) and the challan serves as a receipt, could significantly reduce the administrative burden.

As the Union Budget 2024-25 approaches, all eyes are on the expected announcements aimed at enhancing healthcare coverage for senior citizens, encouraging retirement savings, and simplifying capital gains taxation. These measures are anticipated to align with the government’s vision of a developed India (Viksit Bharat) by 2047, promoting economic growth and improving the quality of life for its citizens.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.