Tax Saving Options Apart from 80C for Senior Citizens

People work hard their whole lives and save money so that they can have a peaceful life after retirement. However, that doesn’t mean that senior citizens don’t have to file income tax returns. Today, all taxpayers have the option of selecting either the old tax regime or the new one. The old tax regime allows people to reduce their taxable income by making investments. Due to the increasing health insurance cost, these investments help them in being financially secure. One of the most popular sections is 80C, under which anyone can get a tax rebate of 1.5 lakhs annually. However, there are other tax saving schemes for senior citizens, like section 80D (rebate on health plan premiums) and 80DDB. Let’s learn more about them.

How does section 80C help in saving tax?

Section 80C is one of the most common tax saving investments under the Income Tax Act. A taxpayer can claim the deduction only if he/she opts for the old/existing tax regime in a financial year. The deduction cannot be claimed if the individual opts for the new concessional tax regime. Section 80C can be availed only by individuals and Hindu Undivided Families (HUFs). Here’s how Section 80C helps in saving tax:

An individual or HUF can claim a maximum deduction of up to Rs 1.5 lakh every year by investing in certain investment instruments or spending on specified expenditures.

• The eligible tax saving investments include Public Provident Fund (PPF), Employees' Provident Fund (EPF), Equity-Linked Savings Scheme (ELSS) Mutual Funds, National Savings Certificate (NSC), Sukanya Samriddhi Savings Scheme, tax-saving 5-year fixed deposits with a bank and/or post office, Senior Citizen Savings Scheme (SCSS), and National Pension Scheme. Choose tax saving investments wisely.

• The specified expenditures for which a person can claim tax deduction under Section 80C are premiums paid towards life insurance, children’s school fees, and repayment of the principal of a home loan.

In addition to Section 80C, senior citizens have many other tax saving options to reduce their taxable income.

Tax-saving investments other than Section 80C for senior citizens

Apart from Section 80C, the other tax saving schemes for senior citizens are:

• National Pension Scheme (NPS):

By investing in NPS, senior citizens can avail of a deduction of INR 50,000 as per section 80CCD(1B). This is in addition to the deduction of INR 1,50,000 for a contribution made to NPS under Section 80C in a financial year.

• Payment of premium towards medical insurance:

As per Section 80D, senior citizens can avail of a tax benefit of up to INR 50,000 for a premium paid towards a health insurance policy. Those who do not have health insurance can avail of a deduction of INR 50,000 towards actual medical expenses. However, it is good to have senior citizen health insurance or individual health insurance for financial protection during medical emergencies.

• Expenses incurred towards the treatment of specified diseases:

Under Section 80DDB, senior citizens can claim a deduction of INR1 lakh or actual expenses incurred, whichever is lower, for medical treatment of specified ailments such as malignant cancers, Parkinson’s’ disease, kidney failure, etc.

• Tax benefits for the disabled:

Senior citizens suffering from 40-80% disability can claim a flat deduction of INR 75,000, while those with more than 80% disability can avail of a maximum tax benefit of INR 1,25,000. The disability has to be certified by an authorised medical practitioner.

• Donations to charitable organisations:

This tax saving investments under Section 80G allows tax deductions for donations made to approved charitable organisations such as National Defence Fund, PM National Relief Fund, Fund for Army, registered Public Charitable Trusts, etc.

• Interest on deposits:

Under Section 80TTB, senior citizens can claim a deduction on the interest earned on a savings account as well as fixed deposits.

Conclusion

There are a number of tax saving schemes for senior citizens apart from Section 80C.Most taxpayers are aware of only Section 80C deductions; however, you should also be aware of other tax saving investments mentioned above, which will help reduce the tax burden to a large extent. While filing income tax returns, ensure you have proof of investment in all the tax saving options. In addition to tax saving options, senior citizen health insurance is a must to safeguard your savings, given the increasing health insurance cost.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.