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Tax planning for different age groups

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tax planningMost of us feel tax planning is a general exercise done every year (or March) to save tax through various tax saving products. However, like financial planning, tax planning is not the same for everyone. You need to invest in various products as per factors such as your tax slab, age, risk and so on. Here is an effort to distinguish tax planning as per different ages.

Tax planning for 25-35

  • Most of the youngsters between 25-35 years of age are either in 10% or 20% tax slab.
  • Section 80C helps save up to Rs. 1 lakh.
  • EPF/NPS should cover up to Rs. 25,000 of 80C.
  • Investment in ELSS should be up to Rs. 40,000.
  • PPF investment can be up to Rs. 25,000.
  • Life insurance premium can be used for deduction up to Rs. 10,000.
  • Under section 80D, tax deduction is allowed up to Rs. 15,000. At least Rs. 10,000 of this limit should be utilized by opting for individual/floater policy.
  • There are chances that you are servicing an education loan. Entire interest payment is deductible.
  • You would be eligible for RGESS if you are a first time investor. You can invest up to Rs. 50,000 in it and save tax up to Rs. 2500 (10% bracket) and Rs. 5000 (20% bracket).
  • You must have also applied for housing loan. Interest paid can be claimed up to Rs. 1,50,000 if you are living in it. If it is being rented, there is no upper limit.

Tax planning for 35-50

  • Most of the people in this age group will be in either 20% or 30% tax slab.
  • EPF/NPS should cover about Rs. 50,000 of section 80C limit of Rs. 1lakh.
  • PPF investment should be Rs. 30,000. Tax saving FD can also be considered.
  • Investment in ELSS should be up to Rs. 20,000.
  • Section 80D investment limit of Rs. 15,000 should be fully utilized by taking a comprehensive cover for entire family with higher sum assured.
  • Interest payment for housing loan will gradually decrease as you would be paying off higher interest in the initial stages. It could be up to Rs. 1 lakh in this age group. It could even lower if you have made part payments towards the loan.

Tax planning for 50+

  • Most of the people in this age group will be in higher positions and hence in 30% tax slab.
  • EPF/NPS should be covering up to Rs. 75,000 of the Rs. 1 lakh limit under Section 80C.
  • Tax saving FD’s should be considered for investment up to Rs. 25,000 of Section 80C.
  • Section 80D should be utilized completely.
  • If you are retired, you can consider products such as SCSS. Also, income from Reverse mortgage for senior citizens is completely tax free.


This is only one of the strategies for planning your taxes based on age. Saving tax should not be your only goal. Make sure that tax planning is a subset of financial planning and not isolated from it.

  • yugandhar madineni

    Mr.Suresh Interest paid can be claimed up to Rs. 1,50,000 if you are living in it. If it is being rented, there is no upper limit is this statement correct. I have availed housing loan and i am paid 2.2 lacs towards interest can i get tax exemption for the full amount of 2.2 lacs or 1.5 lacs.
    I am not staying in this house due to my job transfers.

    • Av Suresh

      Yes, you can treat it as rented and claim the entire interest as tax exemption.

      • yugandhar madineni

        But I have to show my rental income right

        • Av Suresh

          Yes, if you show your house as rented, you also need to show rental income from it.

          • Dr. Santosh Bhaskaran

            I have a flat in my and my mother’s name with a bank loan wherein my name is first. If I rent the flat with my mother’s name first, will I still be able to use the exemption on entire interest? She is a housewife and currently senior citizen.

          • Av Suresh

            Yes, you can still do this as the flat is in your name.

          • Dr. Santosh Bhaskaran

            Thank you :)

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