The government has announced several tax-related changes on different asset classes that may impact the tax obligation of investors in the short- and long-term, such as Capital Gain Tax. Especially, seniors have to take care of their tax obligations in sync with their retirement plans, so where should they invest now? Check out various investment options for seniors to invest after the budget announcements.

Also Read: Received An Income Tax Notice After Filing Your ITR? Here’s What You Should Do

Equity Related Instruments

In the budget, the government has changed the short-term capital gain (STCG) tax from 15 per cent to 20per cent and the long-term capital gain (LTCG) tax from 10per cent to 12.5per cent. So, if you have an existing equity investment and your LTCG exceeds Rs 1.25lakh in a financial year, you have to pay tax at 12.5per cent.

From LTCG’s point of view, the tax impact won’t be significant, so you may continue with your equity investment strategy for the long term. However, in the short term, the tax has increased by 5per cent, but post-retirement people usually avoid investing in equities for the short term due to involved high risk, so it won’t impact them much.

FDs- Attractiveness Remains The Same

There is no specific change announced in the budget related to the tax on FD’s interest for senior citizens, so you may continue to invest in them as per your retirement investment plan. However, you must also compare them with other similar options available in the market which are more tax efficient and offer a similar return with similar risk levels but are more tax efficient.

Physical Gold And ETFs

The government has brought tax on physical gold and exchange-traded funds (ETFs) to the same level after the budget announcement. So, now LTCG tax on physical and gold ETF is 12.5per cent whereas STCG tax is levied as per the slab rate of the taxpayer. Earlier to the budget, LTCG on physical and ETF gold was taxed at 20per cent with indexation benefit where the holding period for LTCG was 3 years which is now reduced to 2 years for physical gold, 1 year for Gold ETF and 2 years for gold mutual funds.

Seniors who plan to invest in gold will now need to pay only 12.5per cent without indexation benefit and the holding period for LTCG has also been reduced. SGB and ETFs can be attractive options for them as they offer better tax efficiency along with the benefit of a lesser holding period to qualify for LTCG.

Also Read: How To Claim Tax Refund If You Have Missed The July 31 ITR Deadline

Other Investment Products

Long-term capital gain tax or the holding period has been changed for other investment products as well such as real estate investment trusts (REITs), property, unlisted stocks, international equity ETFs, etc. So, if you plan to make any adjustments to your retirement investment plan, it would be better to discuss it with your investment advisor for more specific solutions and guidance.

The author is an independent financial journalist.