#New Delhi: Financial security after retirement should be thought of beforehand. So invest in different schemes.
And from savings schemes to bonds or stocks – all these investments have the potential for good returns. But in most cases the government has to pay tax on the return. But as per the Income Tax Act, there are many investment avenues and options, on which tax deductions are available.
This facility is especially provided for senior citizens. This report discusses 4 such investment options for senior citizens, which are tax-advantaged.
Tax-free bonds are a great investment option. By doing this, inflation can be overcome and it is possible to earn a good monthly income. These bonds are usually issued by government-backed or government-aided entities. As a result, tax exemptions are also provided along with protection of investments.
All things considered, senior citizens can invest in tax-free bonds for a tenure of 10 years or more.
5-Year Tax Saving Fixed Deposits:
Tax Saving Fixed Deposit is an investment option with a lock-in period of 5 years. That is, the investor cannot withdraw the money in any way before the maturity.
Under 80C of the Indian Income Tax Act 1961, a tax deduction of up to Rs 1.5 lakh is available on investments in fixed deposits in a financial year. Senior citizens benefit from tax-saving fixed deposits along with guaranteed returns and capital protection by DICGC.
The investor can open this FD in post office or bank. Senior citizens can get 6.70 percent return on deposits for 5 years by opening this account at the post office. On the other hand, SBI currently offers 6.30 percent interest on tax-saving fixed deposits.
Senior Citizen Savings Scheme or SCSS (Senior Citizen Savings Scheme/SCSS):
Senior Citizen Savings Scheme or SCSS is a good option for those who want higher returns compared to fixed deposits and also tax exemptions.
Senior citizens can invest from Rs 1 thousand to Rs 15 lakh in this post office scheme. Under this scheme the investor will get Income Tax Act 80C benefit. Currently SCSS is paying taxable interest at the rate of 7.4 percent per annum. Which is much higher than the interest rate offered by banks.
Interest is paid on quarterly basis. The maturity period of this scheme is 5 years. The period can be extended by 3 years if desired after completion of the term.
National Pension Scheme or NPS (National Pension System/NPS):
National Pension Scheme is a government sponsored scheme. The Pension Regulatory and Development Authority (PFRDA) administers the scheme. Investments under this option will avail tax deduction up to Rs 1.5 lakh under Section 80CCD (1) and Section 80 CCE. Age limit for NPS is 18 years to 70 years.