Tax-Saving Tips for Senior Citizens
In case you are a senior citizen looking out for the best tax-saving tips, you may go through the following four options.
1. Invest in Senior Citizen's Saving Scheme
The Senior Citizen's Saving Scheme (SCSS) is a very popular investment instrument among those above 60 years of age. It provides a regular income to senior citizens. You may invest in this scheme by opening either an individual account or a joint account with your spouse at a post office or a scheduled commercial bank. SCSS offers the highest post-tax returns as compared to other fixed-income taxable instruments. The maximum permissible amount that you may invest in SCSS is INR 15 lakhs for a period of five years, which may further be extended by three more years. Senior citizens looking to save tax may opt for this financial instrument as it offers tax benefits under Section 80C of the Income Tax Act, 1961.
2. Avail of benefits under the income tax slab rates
The good news for senior citizens is that the income tax rate for them is lesser as compared to non-senior citizens. As compared to the tax-free slab of INR 2.5 lakhs for regular taxpayers, senior citizens enjoy a slab of up to INR 3 lakhs, while super senior citizens (individuals above the age of 80 years) are exempt from tax up to a limit of INR 5 lakhs. While non-retirees pay a 5% tax on a taxable amount of INR 2.5 to 5 lakhs, senior citizens enjoy a higher limit of INR 3 to 5 lakhs.
3. Invest in health insurance
A health insurance policy provides the much-needed financial security against rising hospitalization costs. Investing in such a policy is a smart option as it provides tax benefits on the premium paid under Section 80D. While non-retirees are allowed a deduction of INR 20,000, senior citizens enjoy a higher limit of up to INR 30,000.
4.Invest in five-year fixed deposits (FDs)
Five-year FDs offer dual benefits of tax saving as well as wealth creation. In case you are a senior citizen, you may opt for such an FD and avail of higher interest rate. Senior citizens may enjoy up to 50 basis points on such an investment vehicle, which is exempt from total income according to Section 80C of the Income Tax Act.
You may keep the aforementioned tax-saving tips in mind in order to avoid unnecessary burden during your sunset years. By doing so, you may enjoy a high degree of financial freedom and reduce your tax liability quite easily.
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