4 tax-saving investments for senior citizens


Here are some of the ways senior citizens can lower their tax liability. (Do keep in mind that these tax benefits are available only for those who opt for the old tax regime.

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Financial planning includes tax savings as a key component. A well-thought-out tax planning approach may help people accomplish their financial objectives while also lowering their tax liability. Financial planning is necessary to provide stability at this significant life milestone, retirement. Tax planning is a critical component of wealth growth, so seniors should invest in low-risk, tax-deductible solutions. Seniors must continue pay taxes annually, nevertheless, even after retiring. To limit your tax liability after retirement, it is imperative that you research the best tax-saving options.

Here are some of the ways senior citizens can lower their tax liability. (Do keep in mind that these tax benefits are available only for those who opt for the old tax regime. These are not available for senior citizens who choose the new tax regime.)

Tax-saving Fixed Deposits

Under Section 80C of the Income Tax Act, you may deduct investments made in this sort of fixed deposit. Those senior citizens who invest in these Tax-Saving Fixed Deposits are eligible to receive a maximum deduction of Rs 1.5 lakh annually.

Seniors who want to invest in bank fixed deposits often choose them because they allow them to cash in their interest on a monthly, quarterly, or annual basis. The best aspect is that older persons who are residents get a greater rate of return on their deposit, and the lock-in period is five years. This provides even more motivation to boost savings.

Check Up to 7.9% interest rate on tax-saving FDs: Latest senior citizen tax-saving FD rates of private, PSU banks

Public Provident Fund

The Public Provident Fund (PPF) is one of the most well-liked investment plans accessible to senior investors when it comes to tax savings. Given that the PPF is issued by the Indian government, it is a secure investment option. Investing in PPFs might help you save up to Rs 1.5 lakh annually. A PPF’s durability is its finest feature. The term of a PPF account is fifteen years, renewable indefinitely in intervals of five years.

Latest PPF interest rate: Was Public Provident Fund rate hiked for January-March 2024 quarter?

Tax-free bonds

The interest paid to bondholders in tax-free bonds is free from income tax, making them a sort of fixed income investment. Public sector initiatives, government corporations, municipal corporations, and other infrastructure firms are the institutions issuing these bonds on behalf of the government.

They are a reasonably secure investment choice that give investors the opportunity to earn pre-fixed interest each year. In addition, investors may save more money because the interest they earn is tax-free. At maturity, the principal is returned, just like with other bonds.

Bonds are issued by government-backed organisations like the National Highways Authority of India (NHAI), Rural Electrification Corporation (REC), and Power Finance Corporation (PFC), among others. They have excellent safety ratings and offer tax-free interest.

Equity Linked Savings Schemes

If you’re looking for big returns and fantastic tax benefits, Equity Linked Savings Schemes (ELSS) are a superb option. The goal of investing in ELSS funds at this point is to generate consistent returns as opposed to volatile ones. You may want to think about spreading your portfolio among balanced and large-cap funds for this reason. With less risk exposure, this can help you generate healthy profits. Tax benefits: Under Section 80C, investments made in ELSS funds are eligible for tax deductions of up to Rs 1.5 lakh.

The three-year lock-in period of ELSS makes it more liquid than tax-saving FDs, which have a five-year lock-in. In contrast to other types of FDs, tax-saving FDs have no liquidity at all. You are not allowed to take out a loan against them, nor can you break them too soon.

(Your legal guide on estate planning, inheritance, will and more.)

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Harry Byrne

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