Financial planning includes tax savings as a key component. A well-thought-out tax planning approach may help people accomplish their financial objectives while also lowering their tax liability. Financial planning is necessary to provide stability at this significant life milestone, retirement. Tax planning is a critical component of wealth growth, so seniors should invest in low-risk, tax-deductible solutions. Seniors must continue pay taxes annually, nevertheless, even after retiring.To limit your tax liability after retirement, it is imperative that you research the best tax-saving options.
Here are some of the ways senior citizens can lower their tax liability. (Do keep in mind that these tax benefits are available only for those who opt for the old tax regime. These are not available for senior citizens who choose the new tax regime.)
Under Section 80C of the Income Tax Act, you may deduct investments made in this sort of fixed deposit. Those senior citizens who invest in these Tax-Saving Fixed Deposits are eligible to receive a maximum deduction of Rs 1.5 lakh annually.
Public Provident FundThe Public Provident Fund (PPF) is one of the most well-liked investment plans accessible to senior investors when it comes to tax savings. Given that the PPF is issued by the Indian government, it is a secure investment option. Investing in PPFs might help you save up to Rs 1.5 lakh annually. A PPF's durability is its finest feature. The term of a PPF account is fifteen years, renewable indefinitely in intervals of five years.
Bonds are issued by government-backed organisations like the National Highways Authority of India (NHAI), Rural Electrification Corporation (REC), and Power Finance Corporation (PFC), among others. They have excellent safety ratings and offer tax-free interest.
Equity Linked Savings SchemesIf you're looking for big returns and fantastic tax benefits, Equity Linked Savings Schemes (ELSS) are a superb option. The goal of investing in ELSS funds at this point is to generate consistent returns as opposed to volatile ones. You may want to think about spreading your portfolio among balanced and large-cap funds for this reason. With less risk exposure, this can help you generate healthy profits. Tax benefits: Under Section 80C, investment ..
The three-year lock-in period of ELSS makes it more liquid than tax-saving FDs, which have a five-year lock-in. In contrast to other types of FDs, tax-saving FDs have no liquidity at all. You are not allowed to take out a loan against them, nor can you break them too soon.
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