Retirement is not such a bad thing. In fact, it is the time to enjoy the benefits of what you have invested in your lifetime. Senior citizens are entitled to many financial benefits and schemes extended by the government under its social security scheme. Here are some benefits for senior citizens under different categories.
Currently, a citizen aged above 60 year gets tax exemption for income up to Rs 3 lakh per annum. Income between Rs 3 lakh and Rs 5 lakh is taxed at 10 per cent, from Rs 5 lakh to Rs 10 lakh at 20 per cent, and above Rs 10 lakh at 30 per cent.
For super senior citizens aged 80 years or above, while tax is exempted for income up to Rs 5 lakh, they are taxed at 20 per cent for income up to Rs 5 lakh to Rs 10 lakh, and at 30 per cent for income above Rs 10 lakh.
On top of this, the government has extended many tax benefits under Section 80D of the Income Tax Act. They have increased an exemption limit on interest earned on deposits with banks, post offices, fixed deposits and recurring deposits from Rs 10,000 to Rs 50,000. TDS will not apply on such income under Section 194A. Also, the deduction limit for health insurance premium and medical expenditure is extended for senior citizens from Rs 30,000 to Rs 50,000, under Section 80D.
Under Section 80DDB, the deduction limit for certain critical illness medical expenses for senior citizen and very senior citizens has been raised to Rs 1 lakh. The government has also increased the limits for the Pradhan Mantri Vaya Vandana Yojana, which provides a pension plan with guaranteed returns of eight per cent to Rs 15 lakh.
Extra interest on bank FDs
Fixed Deposits offered to senior citizens aged 60 and above come with additional interest. Most banks offer 0.5 per cent extra on the rack rate of the duration chosen by them. The higher rate is also for any tax-saving deposit opened in the bank. Proof of age is required during the initial deposit.
Many banks offer various schemes for senior citizens, including cheaper home loan rates and lower processing fee for loans, with a rider that they maintain a pension account with that bank. Some banks even offer personal loans to mainly government pensioners, provided they maintain a pension account. Generally, depending on the age, the loan amount equals to 18-36 months’ pension with a cap of about Rs 14 lakh.
Senior citizens can be issued a passport on post police verification basis if they submit a copy of the passport of their child (above 18) staying abroad as an additional document (with a page having their name) along with their application form. In some Passport Seva Kendras, senior citizens who have applied for fresh or re-issue of passports are allowed to submit their applications as ‘walk-in’ applicants. No prior appointment is needed, but the applications are accepted on first come, first served basis.
source - Gconnect