And for a Friday in March as the financial year is almost ending and tax planning for Seniors, some thoughts….. some musings…..
Thankfully for the first time in living memory, the budget has not burdened the existing 20 mn tax payers in the name of Welfarism. Hopefully the “Ease of living” is further facilitated by all State Governments, irrespective of Political affiliations. After all every Politician is promising only Good of the citizens. We talk of Demographic advantage of India as a young Nation, but we must not forget we have more than 110 mn senior citizens, many of them from a generation when Integrity, honesty and hard work based on low cost schooling, college and specialist education was affordable to all. These traits were the hallmark of the Indian Middle class. Those in their late sixties now must start Tax planning so that their entire income is only from Pension and Interest. Then under new laws, those above 75 need not file any Tax Returns. “What needs to be done” is known. The “How to” will need expert Tax planning, Wealth Management, Family Counselling, Estate Management, Succession Planning, Will drafting, Reverse mortgaging, etc. etc. Expert advise – it’s another topic.
Meanwhile, senior citizens must prioritise their savings and expenses in the most Tax efficient and safe way to ensure a hassle free and comfortable living into their eighties and nineties. PPF with Tax free interest of 7.1%+ is the most efficient. If you already have a good balance extend it beyond 15 years by just giving an extension letter to the PO or Bank. Let the balance multiply by tax free interest on the cumulative balance. Exhaust SCSS, Max of 15 lakhs in a PSU. Returns of upto 8%. FD interest of 50,000 is exempt. So about 7-8 lakhs in FD. RBI Bonds are very safe, current 7.15% floating rate, half yearly interest deposit, no upper limit. Some insurance companies offer schemes of Insurance cover plus Tax free annuity after vesting of 5 years. Available upto age 65 only. Many options – choose based only on you and your Spouse’s requirements. Always keep two accounts near your residence. One a PSU and another a big Private Bank. Avoid Cooperative and Mercantile Banks. Close all Bank accounts which are not used particularly in other cities or wherever you are in joint with children but you are the first holder. At best you be the second holder. All physical Assets MUST be covered in your WILL. There should be no prejudice or ill feeling in making a good will and keeping it confidential.
With Covid still not eliminated, senior citizens must be extra cautious with finances, insurance and expenses. Let us all support each other into our sunset years, the caring way, the empathy way, the SEEGOS way.