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Senior Citizens: Best Tax Saving Investment Schemes Research Team | Posted On Thursday, March 28,2019, 11:07 AM

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Senior Citizens: Best Tax Saving Investment Schemes



Financial planning is important as it helps realize your potential to save money, minimize expenses and establish a retirement corpus.

Quite often people nearing retirement do not place sufficient emphasis on retirement planning. This reduces chances of a peaceful retirement. Given below are some of the tax saving investment schemes along with their benefits. This will help you plan better for retirement as well as enable you save taxes for the golden years.

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Senior Citizens: Best Tax Saving Investment Schemes


The Senior Citizens Savings Scheme (SCSS) is mainly for senior citizens. It is a safe investment option that also offers tax benefits. It is one of the best investment options for retirees, who want to earn income on their investment. The scheme offers a regular source of income for senior citizens, where the rate of interest is pre-determined and is not affected by market fluctuations.

The SCSS scheme can be availed for a maximum of 5 years and can further be extended for up to 3 years. Currently, the rate of interest offered for senior citizens saving scheme is 8.7% a year, which makes it an ideal investment option for retirees. This is an effective and long-term saving option, which offers security and added features that are usually associated with any government-sponsored savings or investment schemes. These schemes are available through banks and post offices across India.

Advatages of investing in SCSS

Senior citizens saving scheme is one of the best investment options for retirees. As retirees want to generate more income on their investment, SCSS is a great move. There are other benefits of investing in this scheme as well. They are as follows:

Suited for Retirement: The scheme is specifically designed to support individuals after retirement. So, the scheme can be easily availed at the nearest post office or bank. The applicant must collect and fill the application form and submit it along with supporting documents.

Reliable: The scheme is backed by the government and is one of the safest and risk-free investment avenues. The interest income on this scheme is pre-specified and does not depend on market fluctuations.

Multiple Accounts: A single investor can opt for multiple senior citizens saving scheme accounts. The account holder can appoint a nominee or can open a joint SCSS account. However, the second applicant must be the spouse of the main applicant.

  • Good Returns: Currently the SCSS interest rate has been set at 8.7% a year, for January 2019 to March 2019. So, the scheme offers good return on investments. 
  • Flexible Duration: You can invest in SCSS for a period of 5 years which can further be extended for another 3 years.
  • Tax Saving Instrument: SCSS enjoys Section 80C tax deductions up to Rs 1.5 Lakhs a year.
  • Select your investment: You can make only a one-time investment in the SCSS account. The amount invested must be in multiples of Rs 1,000. The maximum amount that can be invested is Rs 15 Lakhs.

SEE ALSO: Senior Citizens Savings Scheme


National Savings Certificate is a fixed income investment scheme. It is an initiative taken up by the Government of India and aims to encourage small investors invest in this scheme. The scheme has a maturity of 5 years. There is no upper limit on the investment.

You enjoy Section 80C benefits up to Rs 1.5 Lakhs a year. NSC earns interest at the rate of 7.6% a year, which is compounded annually. The interest gets accumulated and is paid along with principal at maturity.

Investing in NSC is an ideal way to grow your money, especially for retirees. This is a low risk investment option that enjoys Section 80C benefits. The maturity amount can be reinvested each year and is available at any post office across India and anyone can invest in it.

Benefits of investing in NSC:

  • Fixed income: This scheme helps you earn guaranteed returns and grow your investment through the power of compounding.
  • Tax saving: the scheme is backed by the central government as a tax saving scheme. So, you can invest up to Rs 1.5 Lakhs to claim benefits of tax deduction under Section 80C.
  • Interest rate: The rate of interest is 8% a year.  Anyone who is looking for a safe investment avenue with tax saving benefit, while earning a steady income can opt for this scheme.
  • Accessibility: Any person can invest in this scheme by submitting the necessary KYC documents at the nearest post office. The certificates can be transferred across post offices.
  • Premature withdrawal: The scheme has a lock-in period and the investor cannot exit early. However, in exceptional cases like death of the investor, the funds can be prematurely withdrawn.
  • Power of compounding: The interest on these deposits is compounded annually and gets reinvested by default.

Bank FD:

Bank Fixed Deposit is a popular investment option for retirees. It is one of the safest and risk-free investment options. Fixed Deposit is popular among all sections of society as it requires minimum documentation and the terms of this financial instrument can be easily understood. Investing in FD is hassle free and has additional benefits for senior citizens. The FDs can be availed at any bank across tenures.

5-Year tax saver FD enjoys tax deductions under Section 80C of the income tax act. The banks offer an attractive interest rate on fixed deposits and for senior citizens; the interest rate is 0.5% higher than normal investors. This makes them one of the safest investment options for retirees.

Advantages of investing in Bank FD:

There are plenty of reasons to invest in a fixed deposit:

  • Guaranteed Returns: The depositor earns guaranteed returns on the deposit at prevailing interest rates. Interest rate is decided at the time of investment and is fixed across maturity.
  • Choose the Tenure: the tenure of the fixed deposit is very flexible. Fixed deposit comes with maturity period ranging from 7 days to 10 years. So, the depositor can choose the maturity period as per his/ her requirement.
  • Good Returns: The rate of return on fixed deposit is higher than savings bank account. So, if you have idle money, this is one of the safest investment options. It also helps you earn good returns on long-term investments.
  • Better Rates for Senior Citizen: One of the primary reasons why Fixed Deposits are so popular among senior citizens is because of the higher interest rates. The rate is generally better for FDs as compared to savings accounts and the rate of interest for senior citizens is higher as compared to other customers.
  • Tax Savings: 5 Year tax saver FD enjoys Section 80C benefits up to Rs 1.5 Lakhs a year.

SEE ALSO:  Benefits of Fixed Deposit

Health Insurance Premiums:  

Health Insurance Premium is a good tax saving avenue for senior citizens. In case of an emergency hospitalization, a health insurance plan takes care of all medical expenses. The deduction limit for senior citizens under Section 80D has now been increased from Rs 30,000 to Rs 50,000 a year, on premiums paid for health insurance. To top it all, if you are paying health insurance premiums for senior citizen parents, you get the tax benefit.

Advantages of Health Insurance Premium:

  • Health problems leading to hospitalization is high post retirement.
  • Covers hospitalization despite rising costs of medical treatment.
  • Cashless facility is offered by insurance companies at network hospitals that help the insured get proper treatment at the right time, without going through the hassles of paying high medical bills.
  •  Offers free health check up facilities as preventive measures under some health insurance plans.

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