Section I: Income Tax and You

• Ques: Above 65 Years and Receiving Pension
• Ans: Congratulations for achieving 65 years of age.
  Key points to remember:
  • The pension received is taxable just like salary income. You are a normal income tax assessee like any other salaried person.
  • If TDS is not deducted from your income because you are a senior citizen, then it does not mean that you don't have to report that income.
  • Being a senior citizen, you can invest in instruments like Senior Citizens Savings Scheme. You can invest upto Rs. 15 lakh in this scheme and earn 9% interest, payable quarterly. The tenure of the scheme is 5 years, which can be extended by another 3 years.
  • You can also invest in post office monthly income plan which gives 8% interest per annum, payable monthly.
  • You should shift investments to tax-free instruments like dividend-bearing stocks and mutual funds.
  • You should commute your pension policy since one-third of the commuted amount is tax-free. Since it has to be decided at the time of retirement, you should plan the pension before retirement.
  • You can buy property and reverse mortgage it to get tax-free income. This will not only give you regular income, you will also make an asset/gift for your family.