By the virtue of Indian definition of a senior citizen, every 60 years old person becomes entitled to a variety of exclusive financial as well as non-financial benefits.
Thanks to longevity, rising health standards and improvement in medical amenities, the population of senior citizens in India is rising continuously and has already crossed 10 crore couple of years ago.
Senior citizen in India is defined as a person who has attained the age of 60 years unlike, some advanced countries like UK and Canada where senior citizens' status is given only on crossing 65th birthday. Although, many 60 years old individuals enjoy perfect health and physical ability to continue gainful employment yet, by the virtue of Indian definition of a senior citizen, every 60 years old person becomes entitled to a variety of exclusive financial as well as non-financial benefits.
Some of these benefits are discussed here:
Exclusive financial benefits for senior citizens can be broadly divided into two categories namely: Concessions in Income tax and exclusive investment / insurance plans targeted towards senior citizens.
Special investment / insurance plans available to senior citizens only
1. In small saving schemes there is one scheme “Senior Citizen Saving Scheme” which is available to senior citizens only. It is a five-year deposit plan with nationalized banks / post -offices and carries the highest safety, as it is considered a sovereign debt. Currently interest rate being offered is 8.3% per annum, which is quite impressive as compared to bank fixed deposit where present prevailing interest is in the range of 6-6.5% per year. Interest under this scheme is paid at quarterly intervals and thus, is very convenient for senior citizens to get pension type regular quarterly income. However, there is an upper-limit of the investment amount which is limited to a maximum of Rs. 15 lakh per senior citizen. This scheme is for five years period.
All kinds of senior citizens, whether non-tax payers or even rich senior citizens in 30% tax bracket can also avail this wonderful investment opportunity.
2. Most nationalized banks and even some private banks offer “additional interest” to Senior Citizen depositors in the range from 0.25 % to 0.50% pa.
3. LIC has launched “Varishth Pension Beema Yojna” in 2017 which gives assured return of 8% for a period of 10 years. However, maximum amount that can be invested in this scheme is limited to Rs. 7.5 Lakh per senior citizen. Recent Budget 2018 has proposed to increase this maximum investment amount from Rs.7.5 lakh per senior citizen to Rs.15 lakh per senior citizen which is a cheerful news as monthly pension up to Rs.10,000 can be ensured with the enhanced limit. Interest in the shape of pension can be received on monthly, quarterly, half-yearly or on annual basis as per the choice of the senior citizen.
Special features of Varishth Pension Beema Yojna include “no medical checkup requirement” and it is an immediate annuity plan. Also, there is a flexibility of early surrender of the policy in case the pensioner is diagnosed with any critical or terminal illness. Loan facility is also available subject to certain terms and conditions.
4. Similarly, National Insurance company has launched Varishth Mediclaim Policy for providing health Insurance coverage to senior citizens in the age bracket of 60-80 years. Maximum coverage for hospitalization expenses is Rs. 1 lakh per senior citizen and Rs. 2 lakh for critical illness per senior citizen. This policy can be renewed till the insured is 90 years of age. Plan benefits include cost of medicine, drugs, blood, oxygen and diagnostic charges etc. Emergency ambulance charges up to Rs.1,000 is also covered for each policy year. Under critical illness cover of Rs.2 lakh the claim is paid for diseases like cancer and stroke etc. even without being hospitalized.
Concessions in income tax liability exclusively for senior citizens:
1. For calculation of income tax, senior citizens have been divided into two categories namely, 60-80 years for senior citizens and above 80 years for super senior citizens.
Minimum exemption limit for senior citizen is fixed at 3 lakh as compared to Rs. 2.5 lakh for person below 60 years of age. Similarly, for super senior citizens there is no tax payable unless annual income exceeds Rs 5 lakh. Accordingly, all senior citizens get an exclusive concession of Rs.5,000 in income tax liability for a year and super senior citizens get an additional concession of Rs. 25,000 in one year.
2. Section 80 D: Section 80 D is an important tax-saving section as it gives deduction in taxable income, if the tax-payer pays health insurance premium for medical coverage. Senior citizens were already allowed a maximum deduction of Rs. 30,000 under this section which has now been increased to Rs.50,000 in the latest budget 2018. All senior citizens are recommended to invest in a suitable health insurance plan for medical emergencies and also avail the savings in income tax.
3. Section 80 DDB: Section 80 DDB of income tax act allows exclusive deduction for senior citizens for medical treatment of specified diseases. In the latest budget 2018, deductions under this section has been increased to Rs.100,000 for senior citizens (60-80 years) as well as for super senior citizens. These specified diseases include neurological diseases, AIDS, malignant cancer and hematological disorders. Deduction under this section has been increased keeping in mind rising medical inflation.
Important feature of this Section is that this deduction is available on the expenditure incurred by a senior citizen taxpayer on the treatment of specified diseases for self or spouse, dependent parents, children, brother and sister.
4. Section 80 TTB: In the latest budget 2018, senior citizens have been given special bonanza by introduction of a new section 80TTB. Under this section, all senior citizens will enjoy tax-free interest on saving accounts, banks fixed deposits, recurring deposits, as well as deposit in Post Offices up to a maximum limit of Rs.50,000 per year. Thus, a senior citizen in 30% tax bracket will save additional Rs.15,000 as lower income tax liability.
Other general benefits / privileges to senior citizens include 50% discount in air travel fare for domestic travel by Air India, 40% and 50% discount in train fairs for men and women respectively for all classes of trains including Rajdhani and Shatabdi.
BSNL and MTNL give priority to senior citizens for registration of telephone and discounts are offered on installation charges as well as monthly service charges.
Thus, senior citizens of our country are a pampered lot as they are given several financial /non- financial concessions. Besides, they also enjoy respect and pride as part of our culture where elders are generally perceived as individuals with higher wisdom.(The writer is Group Director – Corporate Affairs, Bajaj Capital)