Higher interest, tax breaks and discounts: Financial benefits senior citizens can avail in India

Turning 60 is a watershed moment in everyone's life as active earning stops and dependency on retirement corpus increases. Indians shoulder greater responsibility to build and fund their retirement due to the absence of state-funded retirement framework. On the occasion of Senior Citizens’ Day, let's explore how concessions available after retirement can cushion expenses.

Although retirement benefits fall short of the safety nets available in welfare states but they can offer substantial support, concessions and financial benefits through higher interest, tax breaks and discounts. Digital-first lifestyle and eldercare platform Primus Senior Living and Marzi founder and manager director, Adarsh Narahari, said, “In India, where universal state-funded pensions do not exist for private-sector workers, the government cushions senior citizens through yield multipliers, tax reliefs, administrative simplifications , and health insurance deductions," as reported by Mint .

Higher interest rates typically for senior citizens becomes a boon as commercial banks and post offices offer an additional 0.25-0.75 percentage point over standard fixed deposit rates for people above 60.

Moving beyond bank deposits, a government-backed financial tool ensures higher yield. Through Senior Citizens' Savings Scheme (SCSS), senior citizens can avail interest rate of 8.2% a year, with quarterly payouts. By investing ₹ 30 lakh in this scheme, the individual can get ₹ 61,500 payout per quarter, or ₹ 2.46 lakh a year.

Underscoring the practical value of such regular payouts , Bajaj General Insurance retired executive Bhaskar Nerurkar said, “The extra half to three-quarters of a percent on investments is a big plus. Along with priority queues and transport discounts, it is one of the key benefits seniors actively discuss.”

The tax regime chosen by a senior citizen can also make a difference. Under the old tax regime, senior citizens get certain enhanced deductions, including on health insurance premiums.

Enhanced deductions under the old tax regime add up to financial benefits in old age. Mumbai-based chartered accountant Janhavi Pandit said, “Under the old tax regime, Section 126 (formerly 80D) provides a deduction of up to ₹ 50,000 for health insurance premiums for individual senior citizens. Within this deduction, a ₹ 5,000 sub-limit is set in place strictly for preventive health check-ups."

Moreover, Section 80TTB of the Income Tax Act under the old tax regime allows individuals aged 60 and above to claim a deduction of up to ₹ 50,000 on interest income earned from savings, fixed or recurring deposits.

Even new tax regime offers certain benefits, Section 87A rebate can make income of up to ₹ 12 lakh effectively tax-free.