Investment options for senior citizen with provision of monthly income

POSTED BY Hvishal ON March 15, 2014 9:08 am COMMENTS (8)

Hi

My aunty has got some 15 lac money which she has got through settlement of one of the property with her brothers and sisters. She comes under senior citizen bracket. Now she wants to invest this money in such a way that she gets regular income on monthly basis and also doesn’t want to go via MF route. I’ve suggested her to split the money this way –

a. Put around 10 lacs in FDs, she can divide it in 3-4 banks based on interest rate and for tax savings purpose.
b. Put remaining amount into savings account with banks such as AXIS bank which provides rate of interest of around 6% so that she gets some regular income.

I’ve also suggested her to invest in e Gold option. However these are my opinions and I\’m not expert.

Can somebody please suggest –

a. What could be the best options to meet her requirements.

b. Whether she needs to pay tax on this 15 lac and what will be the taxation rules for income on this money if she invests it in FDs considering that she is senior citizen.

8 replies on this article “Investment options for senior citizen with provision of monthly income”

  1. ashalanshu says:

    Dear Hvishal, the money received as settlement is tax free to her.

    Thanks

    Ashal

  2. Hvishal says:

    Hi Ashal, seems there is some confusion. I got the details on 15H form to avoid getting TDS charged, I’m asking whether there will be any tax charged on initial 15L investment that my aunty has got and will it be considered as her income. Hope I’m not confusing again.

  3. ashalanshu says:

    Dear Hvishal, from where did you put this 15L figure? I’m asking to declaring the form 15H. Please google a bit to know more about form 15H.

    Thanks

    Ashal

  4. Hvishal says:

    Thanks Ashal. Can you please also confirm whether there will be any tax charged on 15L and to save it whether any agreement needs to be made for bank to avoid tax on it.

  5. ashalanshu says:

    Dear Hvishal, as the combined interest income ‘ll be less than 2.5L Rs. it’s not taxable for her but as the interest income from Fd itself is more than 10000 Rs. it’s liable to TDS. So to avoid TDS, she needs to fill and submit form 15H every year in the month of April in the bank branch where these FDs are invested in.

    While opening the FDs, please declare that you want mly interest pay out and bank staff ‘ll do the needful to credit mly interest automatically into the SB account.

    Similarly, the sweeping FD enabled SB account can be availed within her existing bank account.

    Thanks

    Ashal

  6. Hvishal says:

    Thanks Ashal for your inputs. Just wanted to understand couple of things –
    – what is the difference in 10L in single bank with monthly interest option and SB account with sweeping FD facility. What is that investment option called which provides monthly interest option other than SB account.
    – Will she be charged tax on 15L by any way as this is not her income but property contribution from her ancestral property.
    – I think she will not have to pay any tax as her interest will be lower than 2.5 L
    – What scenario one needs to provide PAN number to bank.

    thanks again for your help.

  7. ashalanshu says:

    Dear Hvishal, please ask her to put 10L Rs. in a single bank with mly interest pay out option. Keep 3L Rs. in long term cummulative FD for 10Y. Remaining 2L Rs. as her emergency funding in SB account with sweeping FD facility. No gold for her.

    thanks

    Ashal

  8. Hemanth Chandra says:

    Interest on Savings account in Axis Bank is only 4 %. Only Kotak Mahidra, Yes banks provide interest of around 6% for savings account.

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