According to statistics, the percentage of older adults in India, classified as those above 60 years of age, is expected to go up from 8% in 2015 to 19% in 2050. The increasing population of the elderly has led the government to implement various financial and non-financial schemes to ensure a dignified life for the elderly. The most common among these measures are the various monetary benefits offered to senior citizens in India in terms of tax rebates and higher interest rates on savings.
In case you are a senior citizen, here is a list of some of the financial benefits available to you:
Senior Citizen Savings Accounts
Various government and non-government banks offer savings accounts specially designed for senior citizens, providing them with exclusive services and benefits. Most of these banks provide a dedicated senior citizen desk at their branch to facilitate banking transactions for the elderly. Besides, they offer high-interest rates to seniors on their savings, such as the Grand Savings Account from Kotak Mahindra Bank that offers 6 per cent per annum interest on savings to the elderly.
Other features that you can avail in a senior savings account include:
Lifetime free debit card
Higher cash limits
Personal accident insurance
Discounts on medical bills
Higher rates on deposits
High-Interest Rate Deposits
Senior citizens prefer to invest their money in fixed deposits, as they are considered safer than investing in equity, and promise fixed returns. In India, senior citizens are offered higher interest rates as compared to the general public. Most banks provide 0.50 per cent higher interest rate to seniors with AU Small Finance Bank and IDFC Bank offering the most lucrative rates presently.
Regarding tax, according to the newly incorporated section 80TTB in the IT Act, interest of up to INR 50,000 earned on deposits held with banks, co-operative banks or post offices are exempted from tax. Besides, no TDS must be deducted from interest payments made up to INR 50,000 in a financial year. To avoid deduction of TDS, you must submit Form-15H to the bank.
Senior Citizen Savings Scheme
The Senior Citizens Savings Scheme (SCSS) is a government-backed scheme for the senior citizens of India. It offers a regular stream of income with tax saving benefits, making it a good investment option post 60 years of age.
Presently, the scheme is offering over 8 per cent interest per annum, which is better than most fixed deposit schemes. However, an individual can only invest a maximum amount of INR 15 lakh, individually or jointly, in an SCSS account. Also, the amount invested in the scheme must not exceed the money that has been received on retirement. Therefore, you can invest either INR 15 lakh or the amount received as a retirement benefit, whichever is lower. The tenure of the investment is fixed at a minimum of 5 years and can be extended by up to three years. The interest is paid at quarterly intervals, offering regular income to retirees.
Note that the money invested in the scheme can be used to claim a tax deduction of up to INR 1.5 lakh under Section 80C of the Indian Tax Act, 1961.
Senior citizens also get the following income tax concessions:
The minimum exemption limit for senior citizens is fixed at INR 3 lakh as compared to INR 2.5 lakh for others. Similarly, for super senior citizens (those above the age of 80 years), no tax is payable unless their annual income exceeds INR 5 lakh.
Under Section 80D, senior citizens are allowed a maximum deduction of INR 50,000 for health insurance premium.
Section 80DDB of the IT Act allows a deduction of INR 100,000 for senior citizens for medical treatment of specified diseases such as AIDS, neurological disorders, cancer, etc. Note that the deduction is available on the expenditure incurred by a senior citizen on the treatment of the above-mentioned diseases for self or spouse, dependants, as well as siblings.
Besides the financial incentives offered by the government, Indian Railways offers senior citizen concession to the elderly on all train tickets. Even telecom companies, BSNL, and MTN, offer discounted rates on installation and monthly charges to seniors.
As you can see, there are a lot of financial concessions available to senior citizens in India. We urge you to stay updated and take advantage of these schemes to enjoy your golden years better.