Make The Most Of Tax Breaks By Investing In The Right Scheme

Oct 10, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

The government has taken significant steps to help empower senior citizens financially by increasing the tax exemption amount about investments and insurance.

Make The Most Of Tax Breaks By Investing In The Right Scheme

According to a study by the UN, by the time we reach 2050, we will have 19% percent of our population above the age of 60, wherein the senior population will surpass the 323 million marks (more than the population of the entire US in 2012).

With a magnanimous amount of population heading towards retirement, it is crucial that the youth and working class realize the importance of retirement planning. Saving for retirement corpus as a concept is not clearly understood by the youth and is widely viewed as hypothetical in their 20s. The truth about retirement, however, is that you must start from an early age.

Unless you start planning early, you won’t get a head start which is crucial for a financially stable retirement. It’s easy to understand that the earlier you start saving, the more money you will have upon retirement and perhaps if any uncertainty arises, you can retire earlier than planned.

For senior citizens who have already retired, there are many ways through which they can avail various tax benefits. Even at this stage, retirement planning is crucial, not with regards to accumulation but for investment. In this year’s budget, the finance minister, Arun Jaitley, announced the increasing benefits being offered to senior citizens with regards to tax savings and health protection schemes. People who are close to retiring can make a note to prioritize retirement planning and make an investment accordingly.

Here are few of the added benefits for senior citizens.

  1. Increased exemption amount under 80TTB: Earnings which come through interest on bank savings account, fixed deposit schemes or post office schemes will have an exemption limit of up to Rs. 50,000. This is a massive boost for senior citizens who will now enjoy exemption of up to Rs. 50,000 as compared to Rs. 10,000 before. The benefits of senior citizens are now handled under 80TTB as opposed to 80TTA which was the governing section.
  2. Increased exemption for health insurance premium payment under Section 80D: Like the exemption on investment, senior citizens will now get tax exemption up to Rs. 50,000. The limit has been raised by Rs. 20,000 and will help to get better health coverage for themselves. The benefit will also be extended to the person paying the premium on behalf of parents.
  3. Increased exemption limit for medical expenditure: Under Section 80DDB, the government has proposed that senior citizens will get a tax exemption of up to Rs. 1 lakh in case they suffer from critical diseases such as motor neuron disease, AIDs and cancer. Previously there were two different limits (60 years and 80 years) which have been simplified into one section.
  4. Increased Investment under Pradhan Mantri Vaya Vandana Yojana (PMVVY): The finance minister proposed to increase the annuity-cum-insurance plan by two years and announced an increased upper limit to Rs. 15 lakhs – twice the current limit.

By investing in the schemes mentioned above, senior citizens can make the most of tax breaks on offer. The changes introduced by the government are laudable and will help empower the senior citizens by making them much more financial stable. Talking about retirement planning, Aegon Life’s Insta Pension Plan helps you with an immediate pension to help take care of the basic needs. This plan pays you a continuous income, post your retirement, for the rest of your life. So that you maintain your current lifestyle even after retirement and live the way you always have – without compromise.

How does the plan work?

Step 1: Decide the amount of premium (lump sum amount) you

want to pay to purchase the Annuity Plan

Step 2: Choose any one of the two available annuity payout options

Step 3: Choose the annuity payout mode with which you would

want to receive your annuity

Go on and start planning for your retirement today.

II/Oct 2018/4458

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