Year Ender: What must be the tax and retirement planning methods for 2023?

It could possibly be time for retail buyers to suppose critically about their tax and retirement plans for the upcoming yr 2023 as the tip of the yr will get nearer. Individuals ought to begin planning for his or her retirement at an early age to be able to save sufficient cash for his or her retirement since this monetary yr 2022 has been outlined by record-high inflation and quite a few rate of interest hikes. By conducting an interview with Dr. Suresh Surana, Founder, RSM India, he mentioned in as we speak’s state of affairs, many of the people begin their retirement planning, proper from an early age, in order to build up ample funds for his or her retirement. Many people nonetheless favor to work until the time they will fulfil their work commitments and are bodily match. On the opposite hand, with rising stress/work stress and decreasing common life expectancy in India, there may be additionally a development whereby some people who’ve gathered ample funds for his or her retirement, take early retirements i.e. within the age of late 40’s or in early 50’s. Nevertheless, additionally it is seen that many people fail to plan for his or her retirement.

Every Senior Citizen, whether or not or not he has deliberate for his retirement, can take a look at among the indicative Tax Planning instruments picked by Dr. Suresh Surana.

1. Investment in Senior Citizens Saving Scheme (‘SCSS’) as per SCSS Rules, 2019

An particular person who has attained the age of 60 years or above on the date of opening of an account or a person who has attained the age of 55 years or extra however lower than 60 years and has retired below Superannuation, VRS or Special VRS, can open an account below such scheme. Such individual can both individually or collectively with partner open an account with a submit workplace or a scheduled financial institution below SCSS. Interest (present fee of curiosity is 7.40% p.a.) on such account is accrued and paid quarterly. The account will be closed after the expiry of 5 years from the date of opening of the account. The depositor might lengthen the account for an additional interval of three years. Such Deposits in SCSS qualify for deduction u/s 80C of the Income Tax Act, 1961 (‘IT Act’) topic to the cumulative threshold restrict of Rs. 1.5 lakhs p.a.

2. Senior residents entitled to larger curiosity deduction on Investment in 5 years Term Deposits

Senior residents have another choice to open a 5 years Fixed Deposit Account with a scheduled financial institution in order to avail the good thing about deduction u/s 80C of the IT Act. Currently, the rates of interest supplied by these scheduled banks usually vary from 7.00% to eight.00% p.a. It can be to be famous that, curiosity upto Rs. 50,000 p.a., earned on such time period deposit by a Resident Senior Citizen is allowed as deduction u/s 80TTB of the IT Act. A senior citizen can keep both one or each of the aforesaid talked about accounts however the most cap of deduction that a person can declare u/s 80C throughout a specific FY is restricted to Rs. 1,50,000. The funding in such mounted time period deposits can be extra opportune for senior residents who’re threat averse and are having ample liquidity to handle any exigencies similar to medical emergencies, and so on.

3. Contribute in direction of National Pension Scheme (NPS)

The Pension Fund Regulatory And Development Authority elevated the utmost age for becoming a member of NPS to 65 years and accordingly a person aged between 60 to 65 years may also be part of NPS and proceed upto the age of 70 years in NPS. Such senior residents might declare a deduction of the contribution made to such NPS throughout the general cumulative restrict of Rs. 150,000 p.a. Also, an eligible senior citizen who deposits a sum of cash within the NPS can declare a further deduction of upto Rs. 50,000 in a Financial Year, over and above the mixed deduction of Rs, 1,50,000 p.a.

4. Procuring a Medical Insurance Policy

According to the provisions of Section 80D of the IT Act, Resident Senior Citizens might avail the next deduction of upto Rs. 50,000 for cost of premium in direction of medical insurance coverage coverage as in comparison with different assessees who can declare a most deduction of Rs. 25,000 below this part.

Conclusion

Thus, in our opinion, a senior citizen, after making an allowance for his/her future money flows, might think about any of the indicative tax planning instruments or every other instruments, in order to cut back the undesired tax burden. Further, additionally it is pertinent to notice {that a} resident senior citizen (a person of the age of 60 years or above) not having any revenue from enterprise or career wouldn’t be liable to pay advance tax in accordance with S. 207 of the IT Act and accordingly, such senior residents should take the identical into consideration on the time of tax planning.

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