How a 'Just Retired' can achieve efficient tax-saving through prudent investing?

Written on Thursday, January 3, 2019
By Mitali Sharma

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Senior citizens are privileged with a host of benefits, specially designed to reduce their financial burden - This blog covers the tax-benefits available to Indian Citizens and describes how a 'Just Retired’ can achieve efficient tax-saving through prudent investing. 


Low Tax Liability or Better Tax-benefit


  • First and foremost, senior citizens get good tax benefits as the tax laws are very relaxed for them. Listed below are the tax benefits offered to them.
  • Senior citizens in the age group of 60 to 80 years are not liable to pay any income tax for an annual income up to Rs. 3 lakh.
  • The super senior citizens who are 80 years or more need not pay any tax for annual earning up to Rs 5 lakh.
  • Under Section 80D of Income Tax Act 1961, they get tax deductions for Health insurance premium of up to Rs 30,000.
  • Even under Section 80D of Income Tax Act 1961, senior citizen, who is suffering from a critical illness, can avail a tax deduction of up to Rs 60,000. In the case of super seniors, this limit is Rs 80,000.


Tax-benefit illustration for senior citizens:


For many of you perhaps this is the first year of tax-saving after retirement. The tax-saving parameters are different for retired persons, and post-retirement or a ‘Just Retired’ person. Here is an illustration of how a 'Just Retired’ can achieve efficient tax-saving through prudent investing.


Mr. Ramesh Kumar retired at the age of 60 years as a librarian on 1st April 2018. He received total retirement benefits amounting to Rs. 35.5 lacs, including Provident Fund, Gratuity, Leave encashment etc. Mr. Kumar is entitled to a life-long monthly pension of Rs.30,000/-. Also, he has a PPF Account where the accumulated balance is Rs. 8 lakh. Besides, 15 years ago he bought a medi-claim plan covering himself, his wife and he is regularly paying a health insurance premium of Rs.20,000/- per annum.


Just after retirement, Mr Kumar decides to invest his retirement benefits of Rs.35.5 lacs as per details given below: 



The tax liability of Mr. Ramesh Kumar for Financial Year April 2018 to 31st March 2019 will be computed as under:

bajaj capital


bajaj capital


bajaj capital


Thus, Mr. Kumar has to pay a total tax of Rs. NIL only on his Total Income of Rs. 6,67,350/- with the help of efficient tax saving.

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