Senior citizens can now plan their investments in such a manner that their tax burden would be less. The higher basic exemption limit and the avenue to get relief for investments in the Senior Citizen Savings Scheme will make things easier for them.
Though there are several options , making use of all the available deductions would significantly bring down their tax burden . Apart from investments in the Senior Citizen Savings Scheme, the premium paid on medical insurance is one of the best options before them. The senior citizen can invest up to Rs 1 lakh in such schemes.
With basic exemption limit at Rs 2.25 lakh, they have a higher disposable income in their hands. Investments up to Rs 28 lakh at an average rate of 8% will be tax free in the hands of senior citizens.
Though this makes large investments possible, they have to be careful enough to carry out the necessary paperwork to ensure that there is no tax deduction at source. Otherwise, they will have to find ways later to get refund from the income-tax department.
There are various investment avenues which ensure a regular flow of income for the individual depending on their needs. Some amount can also be channelled towards debt mutual funds, where a fall in interest rates will give the investor good returns. An interest rate fall will boost the prices of bonds that are held by the mutual funds.