As the fiscal year 2023-2024 comes to an end on March 31, 2024, elderly people can look into tax-saving investment choices that not only give risk-free returns but also allow for important tax deductions. With retirement planning at the forefront, smart financial choices can open the way for a secure future. Here is a list of the top tax-saving ideas available to seniors.
Tax-Saving Fixed Deposits
Tax-Saving Fixed Deposits are a simple yet reliable investment option for older persons. These fixed deposits have a 5-year lock-in period and give guaranteed returns. Major banks including the State Bank of India (SBI), HDFC Bank, and ICICI Bank are giving interest rates ranging from 5.50 per cent to 6.25 per cent. The interest generated is taxable, but investors can deduct up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
Public Provident Fund (PPF)
Senior persons can use the Public Provident Fund (PPF) to save for the long term. With a 15-year maturity horizon, the PPF now provides an annual interest rate of 7.1%. The interest generated and the maturity amount are both tax-free, making it a popular choice for tax planning. Investors can make yearly contributions of up to Rs. 1.5 lakh, which are tax deductible under Section 80 C.
National Pension System (NPS)
The National Pension System (NPS) is a pension program that enables elderly individuals to plan for retirement methodically. It provides a combination of funds, corporate bonds, and debt investing choices. The highest investment amount allowed for a tax deduction under Section 80C is Rs 1.5 lakh. In addition, NPS contributions qualify for an exclusive deduction of Rs. 50,000 under Section 80CCD(1B).
ELSS Schemes
Equity-Linked Savings Schemes (ELSS) enable elderly people to engage in equity markets while receiving tax breaks. These mutual funds have a three-year lock-in period and provide the possibility for better returns. The investment in ELSS is eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C. It is crucial to understand that ELSS returns are subject to capital gains tax.
Tax-free Bonds
Income tax does not apply to interest paid to bondholders on tax-free bonds. These bonds are issued on behalf of the government by various bodies, including public sector projects and government enterprises. They provide investors with the opportunity to earn pre-fixed income yearly and are a relatively safe investment choice.
