Executive Summary: A senior citizen has lower cash inflows compared to those who are younger. Recognizing this, the Government and other entities offer different financial and non financial benefits to this community. Higher tax exemption limits, discounts in air and rail ticketing, higher interest rates on fixed deposits, lower interest rates on loans, lower charges in banks, special senior citizen schemes and priority services in certain functions are some of the benefits given to senior citizens.
A senior citizen is generally considered to be an individual who is above 60 years of age. However, this is only a general classification. For the purpose of granting benefits, the meaning of the term ‘senior citizen’ varies from one entity to another. Here are some benefits which you can get if you are a senior citizen.
Tax benefits: The Income Tax department grants a host of benefits to senior citizens. First, the basic exemption limit is higher than that for other assessees. For the Financial Year 2015-16, while the basic exemption limit is Rs. 2.5 lakhs for people below 60 years, this stands at Rs. 3 lakhs for people above 60 years and Rs. 5 lakhs for people above 80 years (who are known as super senior citizens). Please click here for tax slab details for senior citizens and super senior citizens. Second, there is an additional tax benefit available under Sec 80D (payment of medical insurance premium) for senior citizens, with a total eligible limit of Rs. 20,000 in a year compared to Rs. 15,000 for others. Next, the limit under Sec 80DDB for expenses incurred on treating specified illnesses is Rs. 60,000 for senior citizens compared to Rs. 40,000 for others.
Interest rates and charges: Banks offer better interest rates to their senior citizen customers. On loans, some banks offer a concessional interest rate when the loan applicant is a senior citizen. For example, Bank of India offers personal loans with a 2% concession in interest rates. On fixed deposits, almost all banks offer a higher interest rate to senior citizen depositors. Although the premium interest rate offered varies from one bank to another, this normally ranges between 0.25% and 0.75% over the normal interest rate. Normally 60 years is considered as the cut off age to be eligible for such benefits. Some banks may not offer a benefit in interest rate, but may grant lower processing fees and margin requirements for loans if you are a senior citizen. An example for this is the personal loan offered by Punjab National Bank. Most banks also offer savings accounts which are specific to senior citizens. Such accounts entail the account holder to preferential treatment at branches and lower charges for different services.
Other advantages: Other than the above, there are certain specific schemes designed for senior citizens which can help in their finances. For example, the reverse mortgage scheme is meant only for senior citizens. This is an attractive way of using the property to raise funds. Another scheme is the Senior Citizens Savings Scheme by India Post, which offers an interest higher than other comparable products (currently at 9.3% per annum). Non financial benefits include priority action for Right to Information (RTI) second appeals, telephone related services, reservations in buses and services in hospitals and public places. For details on various benefits, please click here. Remember to visit the respective website for an updated list of benefits.
A senior citizen has lower cash inflows as most people do not work when they retire from formal service. In this scenario, obtaining benefits and discounts can help a great deal in augmenting cash flows. Do you know of any other benefit available to senior citizens? Let us know.