When filing taxes, a taxpayer can save money in different ways; for example, they can save money by investing in tax-saving instruments, buying eligible health insurance plans, donating to eligible charities, and using the deduction benefit available under the eligible loans to lower the tax liability. However, when it comes to senior taxpayers, should choose the tax saving instruments carefully because their financial requirements are different from those of regular taxpayers. So, here are 3 instruments that can help senior citizens maximize their tax savings.

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Separate Individual Health Policies For Senior Tax-Paying Couples

A health insurance policy can help you save taxes u/s 80D towards the payment of premiums up to the prescribed limit for an individual. Senior citizens can claim health insurance premiums up to Rs 50000 as a deduction. However, if the senior citizen couples are availing a family floater health insurance policy, both individuals cannot claim the tax deduction benefit separately. If they take individual health coverage and pay their premium separately, they can avail of tax deductions of up to Rs 50,000 each and lower their tax liability to that extent. So, to maximize your tax savings, you may avail of individual health insurance coverage separately for the senior citizen couple.

Investing U/S 80C

There are several tax deduction investment instruments available in the market offering tax deduction benefits of up to Rs 1.50 Lac u/s 80C, such as PPF, ULIP, ELSS, tax saving bank FDs, etc. However, when it comes to suitability for senior citizen taxpayers, they should carefully select the tax-saving instruments. Seniors can’t afford a high risk and may require higher liquidity than regular taxpayers. So, seniors may choose instruments like tax saving bank FDs, Senior Citizens Savings Scheme (SCSS), eligible tax-free bonds, PMVVY, etc. Investment u/s sec 80C comes with a lock-in requirement that usually ranges from 3 years and above.

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Donation U/S 80G And 80GGA

Seniors often like to contribute to society as a philanthropic exercise, which can also help them save taxes. You need to donate to a qualified institution and make sure you pay in non-cash mode and do not exceed Rs 2000 when paying in cash. Depending on the eligibility requirements, the deduction available u/s 80G varies from 50 per cent to 100 per cent of the contributed amount, subject to applicable limits. For example, some of the donations that don’t have any limit are contributions to the National Defence Fund, Prime Minister National Relief Fund, etc. Similarly, you can contribute u/s 80GGA to qualified institutions related to science study and agricultural development to claim the tax deduction benefit of up to 100 per cent of the donated amount.

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Finally

Seniors between the ages of 60 and 65 can also invest in NPS and contribute up to 70 to claim the tax deduction benefit of up to Rs 50000 u/s 80CCD. Similarly, seniors can invest in the Atal Pension Yojana (APY) to claim the tax deduction benefit u/s 80CCD subject to a prescribed limit. While choosing the various tax saving schemes, seniors must take care of their retirement goals and plan their taxes in advance.

The author is an independent financial journalist.