Senior citizens are those individuals who fall under the age bracket of 60 to 80 years of age. While super senior citizens are those aged 80 and above. Senior citizens and super senior citizens enjoy certain tax benefits that can help lower their tax outgo. This article aims at serving as an investment guide for these people. Read on to know how you can plan your tax-saving investments.

Following are some of the tax benefits for senior and super senior citizens:

  • Senior citizens are exempted from tax for up to Rs 3 lac. However, one can also enjoy higher basic exemption limit of tax-free income of up to Rs 5 lac with the help of proper financial planning.
  • On the interest earned from investments in fixed deposits (FD) or savings held with a bank, post office, etc., senior citizens can claim a tax deduction of up to Rs fifty thousand under section 80TTB.
  • Senior citizens can also avail for deductions u/s 80C and 80D of the Income Tax Act, 1961. U/s 80C, senior citizens can claim a tax deduction of up to Rs 1.5 lac on tax-saving instruments such as notified mutual funds, National Savings Certificate (NSC), tax-saver fixed deposits, ELSS tax saving mutual funds etc.
  • Senior and super senior citizens also relish higher tax deductions on health insurance premiums. For example, as a senior citizen, you can claim a deduction of up to Rs 50,000 on your health insurance premium. If you don’t have any health insurance policy, you are still eligible for a deduction of Rs fifty thousand on your medical bills. Furthermore, under section 80DDB, on disbursement for the medical treatment of definite diseases, senior and super senior citizens can claim a tax deduction of up to Rs 1 lac.
  • A senior or super senior citizen can also claim a standard deduction of Rs 50,000 on their pension income or even salary.
  • Senior and super senior citizens are further exempted from tax deducted at source (TDS) once they submit Form 15H, provided that the tax assessed on the individual ‘s total income is 0 or below the exemption limit after claiming all tax deductions.

Strike the right balance of debt and equity

Just like any other investor, senior citizens are advised to have an overall idea of their liquidity needs to better plan their mutual fund investments. According to one’s current lifestyle and standard of living and the availability of funds, one should select the apt investment option for their portfolio.

It is recommended to invest the majority of your corpus in short to medium-term investments that are relatively less exposed to risk. On the other hand, you can invest your surplus funds in long-term or relatively riskier types of investment. Further, it is noted that women from the older generation usually have no income source to their name. This means that their entire basic exemption goes unutilised. So, understand the different types of mutual funds that you can use to your benefit and invest in mutual funds accordingly. Happy investing!

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