Tax exemption under section 80C
All tax saving option under Section 80C of Income tax act can also be used for senior citizens to save their taxes. But keep in mind that PPF is for 15 years and NSC for 5 years and Ten years and ELSS for three years. The invested money will be locked up till the maturity period.
Medical Insurance Premium
For medical insurance senior citizen can claim tax exemption for Rs. 20000 Premium per year. Others can claim only for Rs. 15000 premium in a year. But keep in mind that if senior citizens go for a new medical Insurance Policy he or she has to pay a hefty premium. Renewal of an existing policy may not attract that much premium.
Senior Citizens Saving Scheme
Senior Citizens Saving Scheme is only for senior citizens those who completed 60 years of age. This scheme offer regular quarterly income at the rate of 9.30 percent to senior citizens in retirement. For this investment minimum investment is Rs. 1000 and maximum Rs. 15 Lakh and the maturity period is 5 years which may extend by three years. This tax saving is also under section 80C of income tax act and the total tax saving is available for Rs. 100000 including all other 80C savings. Do not forget to submit Form 15H, if applicable to avoid TDS from the interest of Senior Citizens Saving Scheme.
No Tax for the first Rs. 250000 income
Senior citizens should not pay tax for the first Rs. 250000 income. When you consider tax saving and tax planning, note this in mind and try to stick to earlier tax slabs which will taxed only 10% and 20% Tax. For Very Senior Citizen (Those who have completed the age of 80 years) the nil tax limits is Rs. 500000.
Rajiv Gandhi Equity Saving Scheme
The new tax saving scheme, Rajiv Gandhi Equity Saving Scheme under section 80CCG is also applicable for senior citizens and others as a tax saving scheme, even if it has some conditions. Read more about Rajiv Gandhi Equity Saving Scheme
Senior citizen can reduce his or her tax up to a certain extent, if planned well. Keep in mind the lock in periods and financial needs.