Income Tax Season: 6 tax saving options for senior citizens in 2024
ITR Filing: Senior citizens also have to pay income tax based on the income bracket they fall in. However, there are a number of investment schemes such as NPS, NSC, ELSS mutual funds, Senior Citizen Savings Scheme, etc, which offer tax benefits under Section 80C of the Income Tax Act, 1961.
Tax Saving Tips For Senior Citizens: The last date to file income tax return is July 31, 2024, and a lot of taxpayers are rushing to file it in time, beating the deadline. Senior citizens, too, have to pay tax based on their income in a financial year. ITR filing is a must, irrespective of the tax bracket as it offers a lot of additional benefits to taxpayers. The good thing is that there are a number of options that help them save tax under Section 80C and other sections of the Income Tax Act, 1961. Know five of them here.
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National Pension System (NPS)
NPS is a market-linked retirement pension scheme, which one can join up to the age of 70. A senior citizen can save up to Rs 1.50 lakh in a financial year on deposits under Section 80C. NPS subscribers with a Tier-I account are qualified for an additional benefit of Rs 50,000 on deposits. The scheme aims at building a retirement corpus and giving a monthly pension post retirement.
ELSS Mutual Funds
The equity mutual fund category is also known as tax saver mutual funds. Investments up to Rs 1.50 lakh in a financial year in an ELSS fund qualify for Section 80C deductions. The lock-in period in ELSS funds is three years unlike five years and over in most of the tax saving schemes. Most of the ELSS mutual funds are large-cap heavy. So, senior citizens may also expect higher returns in ELSS than in many fixed income schemes.
Tax saving FD
Fixed deposit schemes that have a tenure of five years or more qualify for deductions under Section 80C. Almost all leading banks offer an extra interest rate to senior citizens. Many senior citizens use FD as a monthly income option as it offers them a guaranteed return and they get their principal amount back on maturity.
Senior Citizen Savings Scheme (SCSS)
This is a post office scheme where deposits up to Rs 1.50 lakh are tax-exempt under Section 80C of the Income Tax Act. In this guaranteed return scheme, senior citizens make a one-time investment and get a return in the form of quarterly interest. One can have a single and a joint account in SCSS and can get a deposit of a maximum amount up to Rs 30 lakh.
Tax-free bonds
Central government and state government companies issue tax-free bonds to boost their infrastructure, housing, railways, and other sectors. Investments in these bonds are tax-exempt. A lot of taxpayers in high income brackets use these bonds to save tax. Senior citizens can also buy them. Investments in bonds of over 10-year duration can help them get higher liquidity and a higher credit rating.
National Savings Certificates
It is a post office scheme that is also run by banks. In NSC, one makes a one-time payment for a lock-in period of five years. Deposits up to Rs 1.50 lakh in a financial year qualify for tax benefits under Section 80C.