Senior citizen taxpayers search for tax-saving choices to scale back their tax legal responsibility and likewise to fetch them a daily revenue. For many senior residents, pension revenue is the first supply whereas they could obtain dividends, rental and different revenue as effectively. A few of them is also working and incomes consultancy revenue.
So far as tax savers for senior residents are involved, most of them yield a hard and fast return. Nonetheless, some publicity to fairness funds proving tax profit could also be thought-about by these with a high-risk urge for food and never relying fully on short-term revenue from them.
Listed below are just a few tax-saving choices for senior residents.
Senior Citizen Financial savings Scheme (SCSS)
Senior Citizen Financial savings Scheme (SCSS), a 5-year funding scheme, is a well-liked funding choice for individuals who are 60 years and above. One could open a couple of SCSS account however the mixed restrict is capped at Rs 15 lakh. The curiosity is payable quarterly and is totally taxable and to be added to 1’s ‘Earnings from different sources’.
5-Yr Tax Saving Mounted Deposits
All banks present tax-saving mounted deposits (FDs) that include a hard and fast charge of curiosity and likewise assist taxpayers save revenue tax. The quantity invested as much as Rs 1,50,000 per monetary yr in a 5-year tax saver FD qualifies for deduction from whole gross revenue and thus reduces tax legal responsibility for that yr. The curiosity cost might be acquired month-to-month, quarterly, half-yearly, yearly, or as a cumulative choice. The time period of the deposit in tax-saving FD is 5 years and deposits can’t be withdrawn earlier than the top of the time period.
Nationwide Financial savings Certificates (NSC)
If you wish to make investments for 5-years with a hard and fast return and likewise tax advantages, NSC fits you. NSC is a one-time funding and the lump sum invested is locked in for a interval of 5 years. There isn’t a curiosity cost on a month-to-month or annual foundation to traders as a result of the curiosity is amassed and paid solely on maturity together with the principal invested. There isn’t a most restrict for investing in NSC however tax profit beneath Part 80 C is barely as much as Rs 1.5 lakh per monetary yr. NSC fits conservative traders who wish to protect their capital because the post-tax return is low in them.
Fairness-linked financial savings scheme (ELSS)
By investing in ELSS, you can’t solely save tax but additionally let your cash take part within the development potential of equities. ELSS are mutual fund schemes that make investments predominantly in equities, present tax advantages beneath Part 80C as much as Rs 1.5 lakh and include a lock-in interval of three years on the funding made. Markets could not stay up at all times and one could discover a 3-year return on the decrease facet. In such a case, it’s higher to proceed and await the market to go greater earlier than redeeming. Whereas choosing the appropriate ELSS schemes, be sure you have a look at their long-term efficiency and select any constantly performing funds. Additionally, importantly, have a look at their sector allocation to keep away from duplication.
Nationwide Pension System
Any Indian Citizen, resident or non-resident, and Abroad Citizen of India (OCI) between the age of 65-70 years also can be part of NPS and proceed or defer their NPS Account as much as the age of 75 years.
Subscribers becoming a member of NPS after the age of 60 years may have an choice of regular exit from NPS after the completion of three years in NPS. On this case, the subscriber will likely be required to make the most of no less than 40% of the corpus ( 80 per cent if earlier than 3 years) for the acquisition of annuity and the remaining quantity might be withdrawn in lumpsum.
On opening an NPS account, a Tier I account will get opened robotically, whereas the Tier II account might be opened to maintain financial savings liquid because it comes with no lock-in interval.
The contribution made in NPS not solely qualifies for deduction beneath Part 80 CCD (1) as much as a restrict of Rs 1.5 lakh per monetary yr but additionally comes with further tax profit beneath part 80CCD(1B) as much as Rs 50,000 a monetary yr.