Updated February 25th, 2024 at 17:36 IST

Looking to save on taxes? Here's how senior citizens can do it in 2024

Senior citizens aged 60-80 have a higher Rs 3 lakh exemption limit, while those over 80 enjoy a more favourable Rs 5 lakh limit, reducing their .

Reported by: Business Desk
Income Tax | Image:Freepik
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ITR 2024: Are you in the age bracket of 60 to 80 years old and looking to enhance your tax savings? According to experts, there are several tailored strategies available for senior citizens within this age range to effectively reduce their tax burdens and ensure financial stability.

"Tax savings are crucial for senior citizens, not only to alleviate financial burdens but also to ensure prudent financial decisions that sustain their funds throughout their golden years. Financial planning remains vital at every life stage, including during retirement. For senior citizens, tax-saving strategies play a pivotal role in managing their finances efficiently," said Arpit Suri, CA and personal finance expert.

Age-based exemption

Senior citizens aged between 60 and 80 benefit from a higher exemption threshold of Rs 3 lakh, while those aged 80 and above enjoy an even more favourable limit of Rs 5 lakh, effectively reducing their taxable income. Additionally, under Section 80TTB of the Income Tax Act, senior citizens can claim deductions of up to Rs 50,000 annually on interest earned from deposits in banks, co-operative societies, or post offices, surpassing the limit of Rs 1.5 lakh available under Section 80C.

Standard deduction advantages

The introduction of the standard deduction of Rs 50,000 in the 2020 Budget has been particularly advantageous for pensioners, irrespective of their employment status. This deduction serves to alleviate their tax burden significantly. Furthermore, senior citizens can avail higher deductions on health insurance premiums under Section 80D. They can claim up to Rs 50,000 per annum for premiums paid for themselves or their spouses, doubling the limit for individuals under 60.

Tax-saving investments for seniors

Investment avenues also provide opportunities for tax savings for senior citizens. The Senior Citizen Savings Scheme (SCSS), tailored for individuals aged 60 and above, offers a secure investment option with an attractive interest rate of 8.20% and tax deductions of up to Rs 1.5 lakh under Section 80C. Contributions to a Public Provident Fund (PPF) account also qualify for tax deductions under Section 80C, with tax-free interest earnings and maturity proceeds.

National Saving Certificate (NSC) investments offer relatively low-risk options with a tenure of up to 5 years, providing tax benefits under Section 80C and annual compounding of interest. Additionally, senior citizens can consider tax-saving fixed deposits offered by banks, which come with a lock-in period of five years and provide tax benefits under Section 80C, although the interest earnings are taxable.

According to experts, by leveraging these tax-saving strategies, senior citizens can effectively manage their taxes and enhance their financial well-being during retirement. "Seeking guidance from tax professionals or financial advisors can further optimise tax planning strategies, ensuring comprehensive financial security in their golden years," Suri added.

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Published February 25th, 2024 at 17:36 IST