Tax Saving Options for Senior Citizens

Almost everyone starts planning for their retirement at an early stage of life in order to enjoy those golden days of life to the fullest. Apart from doing the right retirement planning, it is also important to know about the different tax saving options that are available for senior citizens. Doing so will help you easily buy an investment plan that not just offers great returns in the long run but also helps you to save a lot of money on taxes. As there are a number of tax-saving options available for senior citizens, we have enlisted some of the popular options to make your task easier. 

Tips for Senior Citizens To Save Tax

There are a bunch of investment options available that provide individuals above the age of 60 years or senior citizens to enjoy tax savings. Listed are some of the most sought-after investment options for senior citizens: 

1. Senior Citizen Savings Scheme

Senior Citizen Savings Scheme or SCSS is a popular tax-saving scheme for senior citizens. With the Senior Citizen Savings Scheme, senior citizens can get regular income even after retirement. The Senior Citizen Savings Scheme allows tax savings under Section 80C. This type of account can be opened in a bank or post office and either in joint accounts or individual accounts. The maximum limit to investing in the Senior Citizens Savings Scheme is Rs. 15 lakhs. The tenure of this scheme is 5 years, however, this can be extended beyond that for further 3 years. 

2. Health Insurance Plans

You can also purchase health insurance plans that not just protect you against health emergencies but also provide tax benefits. In comparison to other individuals, the tax benefits offered under health insurance plans are greater for senior citizens. As per the existing tax slab, senior citizens can enjoy tax benefits of up to Rs. 3 lakhs on health insurance plans. Senior citizens who are above 80 years can enjoy even greater tax benefits of up to Rs. 5 lakhs. 

3. Bank Fixed Deposits

Opening fixed deposit accounts in any of the preferred banks is also a great way to tax savings, available to senior citizens. With bank fixed deposits, you can also enjoy wealth creation and enjoy higher interest rates. Section 80C of the Income Tax Act of 1961 specifies the tax benefits available in case you are investing in bank fixed deposits. 

4. Tax-free bonds

Another way in which senior citizens can enjoy tax savings is by investing in tax-free bonds. Tax-free bonds are backed by the government of India and are thus a safe option for investors. So, investing in tax-free bonds is not just tax-free but also risk-free. 

5. National Pension Scheme

National Pension Scheme or NPS is yet another tax-saving scheme that is available to senior citizens. A government-sponsored scheme, NPS is looked after by Pension Regulatory and Development Authority (PFRDA). The contributions made towards the National Pension Scheme are voluntary and allow tax exemptions as mentioned in Section 80C. 

6. National Savings Certificate

National Savings Certificate or NSC is a good option to get a fixed income and a tax-saving investment option. Thai scheme involves lesser risk and can easily be opened at the nearest post office. The tenure of the National Savings Certificate is extended up to 5 years. Under this scheme, only the payout is taxable. 

Take Away

So, keep the above-mentioned tax-saving options in mind and enjoy the benefits of investments. This will help you in getting your tax liability reduced and also get guaranteed returns in the years to come.

Also read: Difference between TDS and TCS