Retirement is the point where a person stops his employment completely usually after reaching a certain age. However this certain age that defines a person as a senior citizen is different from organization to organization. For instance an insurance firm may treat a person as senior citizen at the age of 55 where as the income tax department defines senior citizens as people who have crossed 65 years of their life.
So before you come to the retirement age or become a senior citizen, there are few facts attached to retirement that you must know.
Income tax implications
The income tax department gives concessions to the senior citizens by putting them in the highest tax bracket where the tax obligation up to Rs 2.25 lakh is nil. For men the tax exemption is only up to Rs 1.5 lakh and for women it is up to Rs 1.8 lakh. This exemption limit for a senior citizen translates into income tax savings of Rs 7,500 and Rs 4,500 in comparison to a man and a woman respectively.
Besides there are additional benefits in the form of bigger tax deduction for the medical insurance premium paid for senior citizens. This deduction is allowed up to Rs 20,000 against Rs. 15,000 deduction for any single individual under section 80 D of the income tax act.