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Tax-Saving Tips for Senior Citizens

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Tax-Saving Tips for Senior Citizens
November 08, 2023

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Retirement is indeed a time to relax after all the years of hard work. One of the most important concerns for many retirees is how to make the best use of the accumulated retirement corpus that would keep tax liability at bay.

In case you are a senior citizen looking out for the best tax-saving tips, you may go through the following four options.

  1. Invest in Senior Citizen's Saving Scheme

    The Senior Citizen's Saving Scheme (SCSS) is a very popular investment instrument among those above 60 years of age. It provides a regular income to senior citizens. You may invest in this scheme by opening either an individual account or a joint account with your spouse at a post office or a scheduled commercial bank. SCSS offers the highest post-tax returns as compared to other fixed-income taxable instruments. The maximum permissible amount that you may invest in SCSS is INR 15 lakhs for a period of five years, which may further be extended by three more years. Senior citizens looking to save tax may opt for this financial instrument as it offers tax benefits under Section 80C of the Income Tax Act, 1961.

  2. Avail of benefits under the income tax slab rates

    The good news for senior citizens is that the income tax slab rates for them is lesser as compared to non-senior citizens. As compared to the tax-free slab of INR 2.5 lakhs for regular taxpayers, senior citizens enjoy a slab of up to INR 3 lakhs, while super senior citizens (individuals above the age of 80 years) are exempt from tax up to a limit of INR 5 lakhs. While non-retirees pay a 5% tax on a taxable amount of INR 2.5 to 5 lakhs, senior citizens enjoy a higher limit of INR 3 to 5 lakhs.

  3. Invest in health insurance

    A health insurance policy provides the much-needed financial security against rising hospitalization costs. Investing in such a policy is a smart option as it provides tax benefits on the premium paid under Section 80D. While non-retirees are allowed a deduction of INR 20,000, senior citizens enjoy a higher limit of up to INR 30,000.

  4. Invest in five-year fixed deposits (FDs)

    Five-year FDs offer dual benefits of tax saving as well as wealth creation. In case you are a senior citizen, you may opt for such an FD and avail of higher interest rate. Senior citizens may enjoy up to 50 basis points on such an investment vehicle, which is exempt from total income according to deductions under 80C.

    You may keep the aforementioned tax-saving tips in mind in order to avoid unnecessary burden during your sunset years. By doing so, you may enjoy a high degree of financial freedom and reduce your tax liability quite easily.

Plan Income tax

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ARN: ED/12/19/17049

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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