Tax Saving Tips for Senior Citizens: The last date for filing income tax returns is July 31, 2024, and many taxpayers are rushing to file to meet the deadline. Senior citizens also have to pay tax as per their income for a financial year. Filing ITR is mandatory irrespective of tax bracket as it provides many additional benefits to taxpayers. The good thing is that there are a number of options available under Section 80C of the Income Tax Act, 1961 and other provisions that can help you save on taxes. Here you can check out five of them.
National Pension System (NPS)
NPS is a market-linked retirement pension scheme open to members up to the age of 70. Pensioners can save up to Rs 1.5 lakh in a financial year through deposits under Section 80C. NPS subscribers with Tier-I accounts are eligible for an additional benefit of Rs 50,000 on their deposits. The scheme aims to build retirement assets and provide monthly pension after retirement.
ELSS Mutual Funds
A category of equity funds is also known as tax-saving mutual funds. Investments up to Rs 1.5 lakh in a financial year in ELSS funds qualify for deduction under section 80C. The lock-in period for ELSS funds is three years, compared to five years or more for most tax-saving plans. Most ELSS mutual funds are large cap. Hence, senior citizens can also expect higher returns from ELSS than many fixed income plans.
Tax-saving Fixed Deposits
Fixed deposit schemes with tenure of 5 years or more are eligible for deduction under section 80C. Almost all major banks offer additional interest rates for senior citizens. Many senior citizens turn to fixed deposits as a monthly income option, offering guaranteed returns and returning the principal on maturity.
Senior Citizens Savings Scheme (SCSS)
This is a post office scheme under section 80C of the Income Tax Act that provides tax exemption on deposits up to Rs 1.5 lakh. Under this guaranteed return programme, senior citizens make a one-time investment and receive returns in the form of quarterly interest. You can have an individual account and a joint SCSS account and receive deposits up to Rs 3 lakh.
Tax Free Bonds
Central and state government undertakings issue tax free bonds to strengthen infrastructure, housing, railways and other sectors. Investment in these bonds is tax free. Many high income taxpayers use these bonds to save on taxes. Senior citizens can also buy them. Investing in bonds with maturities greater than 10 years offers greater liquidity and higher credit ratings.
National Savings Certificates
This is also a post office savings scheme run by banks. NSC pays a one-time payment for a lock-in period of 5 years. Deposits up to Rs 1.5 lakh per financial year are subject to tax under Section 80C.
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