Best Tax Saving Investment Schemes for Senior Citizens

Retirement planning plays an important part in the process of financial planning. Retirement is an important stage of life and everyone wants to financially secure their lives post-retirement. To create a strong financial portfolio, it is important to invest in the right investment options and at the right time so that you can live a stress-free life after retirement.

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As a smart investor, you would want your investment to give you regular returns as well as help you to create wealth post-retirement. While some of the investment options offer only one of the benefits, other investment option offers both the benefit. It is very important that you make the right investment choice so that you can avail of the benefits of both the world.

To help you create a resilient retirement plan for a secured future, here we have discussed some of the best tax saving investment schemes for senior citizens.

Investment Options for Regular Monthly Income


Fixed Deposits and Recurring Deposits


Fixed deposits (FD) and recurring deposits (RD) are one of the safest and most popular investment choices for senior citizens. The interest rate of FDs and RDs offered by the bank for senior citizens are comparatively higher. Moreover, U/S 80TTB of the Income Tax Act, up to Rs.50,000 of interest income is entirely tax exempted for the senior citizens during a financial year.  FD and RD accounts help you to accumulated funds in the long-term and gain a guaranteed return on investment.  Thus as the safest option of investment along with the benefit of tax savings and guaranteed investment return, it is certainly a remunerative tax saving investment option for senior citizens.

Pradhan Mantri Vaya Vandana Yojana

Operated by the Life Insurance Corporation of India, the Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme is a low-risk investment plan, which is specifically designed to provide a regular guaranteed return to the individuals after retirement. Pradhan Mantri Vaya Vandana Yojana comes with a policy tenure of 10 years and offers a fixed interest rate of 8% p.a. 

Depending on the amount invested in the scheme, the monthly annuity offered by PMVVY ranges from Rs.1,000 to Rs.10,000. The maximum purchase price under a monthly mode of pension in a financial year is Rs.15 lakh.  Even though PMVVY does not offer any tax benefit to the investors, the Goods and Service Tax applicable to the scheme are exempted.

Senior Citizen Savings Scheme

Senior Citizen Savings Scheme is an excellent tax saving investment options, which is designed to financially secure the life of the individuals after retirement. This is a lucrative option of investment for individuals who want to invest in the long-term savings scheme and also want to gain other additional benefits along with the safety in investment.

You can subscribe to SCSS from post-offices and banks in the country. The scheme offers a current interest of 7.4% per annum. The interest rate of the scheme is regulated by the Ministry of Finance and are subject to periodic change. Apart from providing you a regular income after retirement, the plan also offers the benefit to save on taxes under Section 80C of the IT Act.

Investment Options for Growth

There are many different types of investment options through which you can achieve your financial objective of wealth accumulation in the long-term. Let’s take a look at some of the lucrative investment option to double your money and create a financial cushion in the long term.

National Pension Scheme

Any individual citizen between the age group of 18years-65 years can subscribe to the National Pension Scheme. As a government-sponsored savings scheme, this scheme is the safest and most beneficial scheme specifically designed to ensure financial security to the individuals after retirement. The National Pension Scheme is regulated by the Pension Fund Regulatory and Development Authority of India (PFRDA). 

The current applicable rate of interest on the NPS scheme is 8%-10%. Moreover, along with the benefit of guaranteed return, the scheme also offers tax benefit U/S80C of the IT Act on the contribution made up to Rs.1.5 lakh in the financial year.

Mutual Funds


If you can take high risk on investment and want to multiply your money then equity mutual fund is a worthwhile investmet option available in the market. About 60%-65% of investment in equity mutual funds are done in equity and equity-related securities with an objective to obtain a higher return on investment over the long term. Even the the risk involved in equity funds are high, the fund returns outperforms the fixed income investment and inflation by a broad margine over the long-term.

On the other hand, if you have a low-risk appetite and want to have a regular flow of income then debt mutual fund is the right choice of investment for you.  In debt mutual fund majorly invests in fixed income securities like corporate bonds, government securities, money market instruments, etc. with a goal to achieve a regular ROI. Even though the risk involved in debt funds are less then equity funds it generates higher returns as compared to the Bank FDs. Moreover, no premature withdrawal charge is applicable in debt fund.

Wrapping it Up!

Retirement age comes with its own merits and demerits. To have a peaceful retirement, it is important to create a futuristic investment planning for retirement. You can consider investing in these plans as per your requirement if you want to create a resilient retirement plan for the future, which not only provides ensured investment return but also works as a great tax saving investment option.

Written By: PolicyBazaar - Updated: 30 June 2021

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