Elderly Citizens are disadvantaged by GST and Taxes

Date: 4 September 2017

With the implementation of GST, the senior citizens or the elderly segment of our population, many of whom are disabled due to advancing age or otherwise, are facing additional burden due to GST. Already, senior citizens do not get any concession for taxes that they pay except in IT, which is not much. They are to pay income tax, even for the savings out of the Fixed Deposits, if the interest received exceeds the limit laid down by the government. They get no concession in registration of the dwelling they live in or for the property/water tax that they have to pay month on month. There is no concession in Capital Gains Tax if they sell their property to meet medical expenses and decide to live in a rented dwelling.

In an environment, where the cost of care increases with age and the interest rates are witnessing a downward spiral, the savings that they get from fixed deposits is dwindling. Due to longevity, which is primarily due to access to better health care, a person who retires at the age of 60 and lives up to say 85 years of age will need to factor in 25 years of life after retirement. The saving that he or she did for himself and for the spouse after fulfilling the family commitments is grossly inadequate since the value of money gets eroded with the passing of each day. Not everyone is fortunate to get pension, which gets adjusted for inflation.

If the senior citizen is living in an apartment or in a house like any other citizen, he or she is not required to pay GST for their housekeeping helper or part time or full time cook or caregiver or part time gardener or security staff or for the staff employed for running of Reverse Osmosis Plant or Sewage Treatment Block in the apartment block or the Gated community where they live.  But the moment they live in a Senior Care Centre or in a Retirement Community, they pay GST for all this.  Is this fair?

For senior citizens living in Senior Care Centres/ Retirement Communities, every aspect of service falls within the ambit of care. To amplify let us take a few examples:

Housekeeping:

1. This is not a service but care, since the seniors living in the Senior Care Centres, need to get their dwelling cleaned for better hygienic living. Otherwise, the dwelling will become unliveable with dust and garbage, which is cleared by the housekeeping staff.
2. Can you expect an elderly citizen suffering from Stroke or a lady suffering from Osteoporosis or anyone suffering from Dementia, Alzheimer or Parkinson cleans the room in the care centre or their house? Surely for their care and clean living, they need the senior care centre which may be cleaned not once a number of times in a day. Because of their physical or mental condition they need this service, which is in effect part of their care.

Medical Service/Care:

These residents have to pay for their medical care like anyone living in an apartment or a house of their own in a real estate complex. But they need to pay GST while those seniors living in normal real estate complex do not pay, since health care is exempt from GST. Doctors, nurses and caregivers provide the medical service, and they are the employees of the retirement community or senior care centres. So is medical service not care? How is it different in a retirement community or senior care centre?

The list is endless.  What do senior citizens get in a retirement community or senior care centre?  They get the following:

1. Medical centre for basic medical attention including short term detention for therapy
2. Physiotherapy/Rehabilitation (both short and long term) for those needing physiotherapy and who need to be rehabilitated after such ailments like Stroke or Knee or Hip Surgery etc.
3. Making available nurses 24X7 as well as Caregivers to those needing such help such as those with restricted mobility or bed ridden or suffering from Osteoporosis or Dementia or because of age etc
4. Para-medics to go with patients in ambulances during emergencies
5. Security of the Elderly – this is a very important aspect as elders feel insecure with age
6. Internal transportation within the community by eco-friendly electric carts
7. To take bedridden/home bound patients outside within the community in wheel chair at least once a day
8. Escorts for the elderly to visit hospitals to see Specialist doctors
9. Counselling by professional counsellors/Psychiatrist for those suffering from Depression, Dementia, Parkinson, Nervous Disorder or Anxiety Neurosis etc
10. Housekeeping assistance to keep the house and toilets clean
11. Normal and special diets
12. as per requirement and as advised by a doctor
13. Emergency evacuation to hospitals by in-house ambulance and para-medics
14. Funeral services

Thus these retirement communities/Senior Care Centres not only provide active life to the seniors but also provide group cohesion and community living. They also cater to the various care requirements as stated above.  Besides we also have Specialised Care Centres for the elderly to cater for Assisted, Memory and Palliative Care. Some of the Senior Care Centres also take care of Persons with Disabilities (Autism, Down’s syndrome, Cerebral Palsy or Spastics) and in this model, such PWD are taken care of after the demise of their parents until the demise of the PWD.  This model is unique in the world.

GST Rules for Elderly and the Disabled:

Under GST Tariff Chapter 99 for the Classification Scheme of Services, the classification for the elderly comes under Heading No 9993 Human Health and Social Care Services and this is further amplified as under:

• Sub Group No 999321, which is for “Residential Health Care Services other than by Hospital “– Nil GST
• Sub Group No 999322, which is for “Residential Core Services for the Elderly and Persons with Disabilities” – 18% GST
• Sub Group No 999331, which is for “Residential Core Services for children suffering from Mental Retardation, Mental Health Illness or Substance Abuse”– 18% GST

For all of the above the elderly and disabled as well as PWD have to pay 18% GST and for food they have to pay 12% GST.  This is a huge financial drain because:

1. This translates to almost Rs 800 to 1000 per month per individual living in Senior Care Centres or Retirement Communities, which could be saved for their future care expenses.
2. With longevity, elderly need to save for care with advancing age and, such cost of care, increases with age
3. Those who are in late 80s have already lived more than 20 years of their post retired life and do not know how long will they live? Because of inflation and declining interest rates and uncertainly over balance of life, they are a worried lot and try and save every penny. Only a few get pension and they also do not wish to ask their children for help since all along they lived with freedom and dignity and do not want to be seen dependent on anyone.
4. There are a large number of Persons with Disabilities (PWD) who are either intellectually deficient or physically or both. Their parents who are senior citizens constantly worry about the care of their child/children (who are adults) after the demise of the parents. Today, models for PWD exist as part of Senior Care Centres/ Retirement Communities. To tax such PWD would increase their cost of care until their death. These parents have sacrificed a lot for such PWD and would be grateful for tax exemptions and not charged with 18% GST, besides 12% for their food and that of the PWD.

What can be done?

All of us are ageing and with advancing age, we need care and services, in that order. These cost money. In the context of uncertainty over our life span and how much the cost of care would be required, the elderly in our country are indeed a worried lot. Old age should never become a curse. It must be a period of life that we need to enjoy with freedom and independence. Elderly do not like the word, “dependent.” Financial independence of our elderly population is getting eroded today due to variety of factors and principal among them being longevity and the elderly, except those who get pension, are finding it difficult to cope with.

In view of the above the Government may consider the following:

1. Grant exemption for the elderly and persons with disabilities from Sub Group 999322 and 999331 as given above
2. Allot a separate Group Number with Tax Exemption for non residential core services provided for the elderly, persons with disabilities and those with intellectual and physical deficiency, who are referred to as PWD as well as those suffering from substance abuse
3. Reduction of registration cost of property solely for the purpose of living post-retired life (only one property purchased for retirement)
4. Reduction in the rate of property and water tax as well as Capital Gains Tax for sale of one property for post retired life

These exemptions and recognizing the Elderly, persons with disabilities, PWD and those who are suffering from substance abuse would go a long way in caring for them. With over 100 million senior citizens in India today, whose numbers are only increasing by the day, these measures will alleviate the suffering of the elderly and disabled population.

Colonel Achal Sridharan, VSM