HOW TO CHOOSE RIGHT TAX SAVING OPTIONS FOR SENIOR CITIZENS

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Senior citizens are referred to as those retired individuals that fall under the age of sixty to eighty years of age. On the other hand, super senior citizens are referred to as those individuals who are aged 80 and above. Both super senior citizens and senior citizens relish several tax advantages which aid these individuals to diminish their tax outgo. In this article we will understand how super senior citizens and senior citizens can choose the right tax saving investment options for their investment portfolio.

Here are a few tax benefits enjoyed by both set of individuals – super senior citizens and senior citizens:

  • Senior citizens earning up to Rs 3 lac per annum are excused from paying any tax. However, if one adopts proper financial planning, they can also enjoy higher elementary exemption limit on taxable income up to Rs five lac per annum.
  • As per Section 80TTB of the Income Tax Act, 1961, senior citizens and super senior citizens can claim a tax deduction of up to Rs 50,000 on the interest earned on several tax-saving investments such as savings held in bank account, post office monthly income scheme (POMIS), bank Fixed Deposits (FD), etc.
  • Senior citizens and super senior citizens can also avail for tax deductions under Section 80C and Section 80D of the IT Act, 1961. As you might know, Section 80C of the IT Act, 1961 allows individuals and HUFs (Hindu Undivided Family) to claim a tax deduction of up to Rs 1.5 lac on tax-saving investment options such as National Savings Certificate (NSC), notified mutual funds, ELSS (Equity-Linked Savings Scheme) tax saving mutual funds, tax-saver fixed deposits, etc.
  • Super senior citizens and senior citizens also enjoy higher tax deductions on their premiums paid against health insurance policies. For instance, a senior citizen can claim a tax deduction of up to Rs fifty thousand towards premiums paid for health insurance policies. Even if any senior citizen individuals do not have any health insurance policies for themselves, they are still entitled for a tax deduction of Rs 50,000 on any payments made against their medical bills. What’s more, Section 80DDB of the Income Tax Act, 1961, on any expenses made against medical treatment of any type of certain sicknesses, super senior individuals and senior citizens can claim a tax deduction of up to Rs 1 lac per annum.
  • A super senior tax-paying individual or a senior tax-paying individual can also claim a standard tax deduction of up to Rs 50,000 on their salary or pension income.
  • Super senior citizens and senior citizens are further exempted from TDS, also known as tax deducted at source if they have acquiesced their Form 15H given that the tax evaluated on an investor’s net income is zero or less than the basic exemption limit once they have claimed all deductions.

Like all other investors, super senior citizens and senior citizens are advised to have the right balance of their equity holdings and debt holdings as per their investment horizon, risk profile, and financial goals. Happy investing!