• Apply now

Money in bank in 24 hours

Apply now

How to save tax under the provisions of the 2021 Budget

  • Highlights

  • The 2020 Budget is being seen as benevolent to senior citizens

  • Tax sops on interest earned from FDs for senior citizens has been raised to Rs.50,000

Presenting his last full Budget before general elections next year, Finance Minister Arun Jaitley announced a slew of measures affecting one's personal finance. Income Tax slabs were left unchanged and the Budget gave senior citizens ample reasons to rejoice. The Finance Minister tried to maintain a fine balance between a pragmatic and populist Budget. Though several announcements made did ruffle investors’ feathers, here’s how the declarations made in Budget 2020 may help you save tax.

Increase in tax benefits on interest earned from fixed deposits

Since time immemorial, Fixed Deposits (FDs) have been one of the most favoured investment tools for Indians, particularly senior citizens who park a major chunk of their retirement corpus into this form of investment. Being fixed-return generating instruments unaffected by market volatility, many senior citizens depend on interest earned from FDs for income post-retirement.

Bajaj Finserv Fixed Deposit

However, the interest earned from FDs are taxable. In a major relief to senior citizens, the Budget has proposed to increase the tax benefits on interest income earned from FDs to Rs.50,000 from the current Rs.10,000. You can also avail the benefit by making an FD investment in the name of your senior parents and avail tax benefits on interest income up to Rs.1 lakh (for both parents).

Tax benefits on health insurance premiums

In another major announcement during the Budget speech, the Finance Minister explained enhanced tax benefits on health insurance premiums for senior citizens. Health insurance premiums are eligible for tax deductions under section 80D of the Income Tax Act 1961. The Budget has proposed to increase the tax sops on health insurance premiums for senior citizens from Rs.30,000 to Rs.50,000.

How to Make Home Renovation Budget Friendly

Bringing all senior citizens under one umbrella, the Budget has increased tax exemption on health insurance premiums for certain specified diseases (critical illnesses), to Rs.1 lakh from the current Rs.60,000 (for senior citizens) and Rs.80,000 (for very senior citizens). You are eligible to avail this benefit if you pay premiums on behalf of your senior parents.

Tax Exemption of 40% on NPS Corpus for Non-Salaried Subscribers

If you are a non-salaried subscriber making contribution to the National Pension System (NPS), Budget 2018 has announced tax-free withdrawal of 40% on your NPS corpus. This was not available earlier. So, now even if you are a non-salaried subscriber, you will be able to enjoy tax sops at par with salaried individuals.

The NPS, administered by the PFRDA, was initially aimed only for Government employees. However, it was opened for all citizens in 2009.

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

Check your cibil score for free

The information, products, and services included in or available on bajajfinserv.in may include inaccuracies or typographical errors. Changes are periodically added to the information herein. bajajfinserv.in and/or its respective suppliers / affiliates may make improvements and/or changes on the bajajfinserv.in website at any time.
The material contained in this site and on associated web pages is general information and it is not intended to be advice on any particular matter. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. The decision with respect to any financial product or opportunity or nature or suitability or choice or the viability of any product or service shall always be sole responsibility and decision of the subscriber and user.

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?


5 important things to check before making an investment

Subscribe Now

Subscribe Now

Subscribe to our monthly newsletter and get the latest updates

Thank you for subscribing