3 Tax-Saving Investments that Senior Citizens should make

When planning your finances after retirement, you must take into account the fact that you’re not earning a regular salary as it defines your risk appetite. In turn, it helps you invest every rupee with care, picking instruments that not only carry limited risk but also restrict your tax liability. After all, this is the money you will use to fund your life post-retirement, so you must be able to preserve as much of it as possible.

To ensure this outcome, consider the following instruments. They balance high returns and help you save on tax, making them portfolio must-haves.

Senior citizen fixed deposits

Of all the types of investment you can choose from, one that gives you assured returns on your investment is a fixed deposit for senior citizens. You can compare the current fixed deposit rates and ratings to select the best issuer. Awarded with ICRA’s MAAA rating and CRISIL’s FAAA rating, this FD keeps your money absolutely safe. Moreover, you can choose the tenor based on your needs as well as the payout frequency, and use special-tenor FDs and FD renewals to enjoy higher returns. You can also forecast your returns using a fixed deposit calculator. Just enter the investment amount, tenor, and payout option, and know the amount you will get on maturity.

Note that you can claim a deduction of up to Rs.1.5 lakh under Section 80C of the Income Tax Act when you pick a 5-year, tax-saving FD.

Senior Citizens Savings Scheme (SCSS)

You can earn 8.7% interest in your SCSS investment currently, but this rate is subject to change every quarter. Also, this scheme has a tenor of 5 years that you can extend for up to 3 years, making it a good mid-term investment. To start an SCSS you can invest any amount in multiples of Rs.1,000 up to a maximum of Rs.15 lakh. Your investment also qualifies for an exemption of up to Rs.1.5 lakh in a financial year under Section 80C of the Income Tax Act.

National Savings Certificate (NSC)

At present, investing in this instrument offers 8% returns on your investment. You can invest in an NSC for a tenor of 5 years or 10 years as per your goals, and start investing with as little as Rs.100.

Do keep in mind that while the returns on your investment do not attract any TDS, this income is taxable as per your slab. However, you can enjoy a tax exemption of up to Rs.1.5 lakh on your NSC investment per financial year. Another factor that you should note is that since your interest earnings from the first year are reinvested, this amount also qualifies for an exemption under Section 80C.

Weigh returns from these investments alongside the tax savings that they offer to make your portfolio robust. Restrict your exposure to risk and increase your dependence on secure, risk-free instruments for a stress-free investment experience.