With the pandemic still raging throughout the globe, making sure the elderly are least affected remains a primary focus of the government.
Senior citizens will be watching Finance Minister Nirmala Sitharaman present the Union Budget 2021 on February 1, as many of these people rely solely on their post-retirement investments and the returns they yield.
Even though the Reserve Bank of India is working tirelessly to ensure that the interest rates are kept low, the same low levels of returns are hurting older people adversely (fixed deposits being one of the most common choices).
Foregoing interest returns?
Fixed deposit interests are also subject to taxation, which makes it more difficult for the older population to reap the maximum benefits of their investments.
Col. Sanjeev Govila, former military personnel and a Registered Investment Advisor, suggests a good way to tackle this loss on the part of the investors would be for the government to increase the exemption limit on interest income for senior citizens.
Such tax breaks would also be immensely helpful for his clients, who are mostly retired Armed Forces officers and their respective families.
A current rate of 6% is offered by most banks as an interest rate against fixed deposit investments.
The interest rate of investments has been falling drastically over the past few years, which affects the entire elderly population since many of them have a regular household dependency on these earnings.
Options, options, or is it?
In a vast market where an immense number of companies and banks offer investment options, the fixed deposits, Pradhan Mantri Vaya Vandana Yojana, Post Office monthly schemes are only some of the few organisations still rolling out regular payment schemes for the elderly people.
However, with options running short for many, the elderly are facing a sad future where the interest returns are only forecasted to decline further.
Moreover, with fixed deposits, investments are made to be taxable on the year of receipt, making it difficult for many older investors to avoid a loss against any investment even after its maturity.
Raghunathan Parthsarathy from Tax and Regulatory Services says that the government can try to dish out schemes that provide superannuation and pension schemes for the elderly against their investment returns.
Col. Govila thinks the retirement plans of many elderly investors don’t provide enough benefits, as they should. Non-commuted pension annuity has no tax benefits, leading many elderly to take lump-sum amounts as annuity on an irregular basis.