65983In view of reduced inflation and expenses, will it be right to invest in IT stocks?

You’ve worked hard and saved for retirement; now it’s time for your money to work for you. At this stage of life, the aim is to protect your capital and ensure that you have enough steady income to meet your demands. Above all, it should be secure. Senior citizens are those between 60 and 80 while super senior citizens are those over 80. Both offer tax advantages. “The various avenues offered by the government to senior citizens need to plug in a while planning for tax–In this age, you may not be working and earning, but every penny saved is every penny earned. This can be done by effectively considering all the factors above. Surely one can look for professional guidance with the restrictions and dependencies that age brings,” said Sandeep Bhosle VP- Customer Interaction, Quantum AMC.

Case studies

For Hari Shahi, 59, a business consultant and mentor by profession, his inspiration is to be adaptable in the dynamic world, make a change, help people and take care of his family and himself. When it comes to taxation planning, he has invested his money in PPF, NSC and insurance policies, amongst other investments, to minimise his tax liability.

Shahi firmly believes that the advantages one receives in tax-saving instruments work just like a good pension scheme for the long term. “It is crucial to plan taxes, so they don’t become a burden. I started the financial planning process late, which made it a little challenging to learn about the financial threats in the market,” said Shahi.  Shahi has also invested in mutual funds and considers it an excellent tool to invest in. It provides flexibility to invest in smaller amounts through systematic investment plans (SIPs) and comes with a lower lock-in period.

Hari Shahi,59- The advantages one receives in tax-saving instruments work just like a good pension scheme for the long term.

Homyar Limbuvala, 62, retired, believes that when it comes to tax-saving instruments, you have to plan so that your income is not impacted or reduced during your retirement period. “For me investing is a continuous process. After retirement, I invested in a senior citizen savings scheme (SCSS) to get periodic interest,” said Limbuvala. Being married and has two kids, he is passionate about traveling to new places.

On the other side for Rajiv Shrivastava, 60, AGM of Ultra-Tech Cement, who enjoys reading, writing, and travelling, believes that the money that he will receive after retirement, he would like to make a secure investment out of it so that he can have a stress-free retired life. This will also give him an ample amount of time to continue with his hobbies. “Tax planning is very crucial for retirement because the investments you make become the only source of income to help you get through your daily expenses, medical expenses, and other necessary expenses that you require after retirement. Hence, it’s also essential to plan for your retirement at an early age,” said Shrivastava.  His major challenge while planning for retirement is maintaining a sufficient balance for the daily livelihood after investing in the various tax savings policies. So he has invested in the SIPs and believes that SIPs after maturity are better than FDs, and you also get a tax benefit.

Crucial factors to consider

Medical insurance that is well-planned in conjunction with tax savings will go a long way. Medical emergencies have the potential to devastate an individual’s financial well-being.

“If they are undergoing any medical treatment of specified disease as per section 80DDB, the deduction up to Rs 1,00,000 will be available for medical expenditure. Senior citizens (age 60 or more) and very senior citizens (age 80 or more) are eligible for a higher basic exemption limit than normal taxpayers. The basic exemption limit for senior citizens is Rs. 3 lakh, and for very senior citizens, it’s Rs 5 lakh,” said Abhishek Soni, co-founder and CEO, Tax2win.in.

However, investment products, particularly for senior individuals, provide better-guaranteed returns and tax savings. Additionally, interest on fixed deposits, posts, and similar items can also be claimed for deductions.

Today, there are many tax benefits available under the Income Tax Law for senior citizens; hence, a few points should be kept in mind while planning their taxes. Senior citizens can invest in 5 years Bank fixed deposit to get a deduction under section 80C. Also, a higher deduction of interest on FD will be available to senior citizens u/s 80 TTB up to Rs 50,000.

Senior citizens are also exempt from advance tax liability if there is no business income. They can invest in a senior citizen saving scheme and get a deduction u/s 80C up to Rs 1.5 lakh. Further, they can benefit from medical expenditure incurred under section 80D up to Rs 50,000/- (subject to certain conditions).

While tax planning, it is advisable to diversify their holdings to include a greater proportion of risk-free securities that offer stable returns. Other investing choices, such as debt mutual funds through SWP mandate, Senior Citizen Savings Scheme, the National Savings Certificate (NSC), and government-issued tax-free bonds, may also be considered.