I’m a 62-year old retired individual earning Rs 86,280 annually from post office monthly income scheme and LIC annuity. What is my tax liability? Could you suggest some tax-saving investments?

Dipak Bhaumik, Calcutta

You haven’t mentioned clearly how much you earn from the post office monthly income scheme (MIS). Annual income up to Rs 12,000 from post office MIS is exempted from tax under section 80L.

Assuming that you earn more than Rs 12,000 from it, your total taxable income comes to Rs 74,280, and your liable to pay tax of Rs 3,856.

To avoid paying tax, you should invest Rs 19,280 in three-year infrastructure bonds. When you turn 65, you’d be entitled to a special tax rebate of Rs 20,000 under section 88B, and will not have to invest in illiquid instruments like tax-savings bonds.

No standard deduction on MIS income

I’m a 62-year old individual living on post office monthly income scheme and LIC annuity. How much standard deduction could I claim, and what is the maximum tax-free income?

I. . P. Singh, Jamshedpur

There is no standard deduction on income from MIS and LIC annuity. You are, however, entitled to a maximum tax exemption of Rs 12,000 under section 80L on your income from the MIS, and income from other sources up to Rs 50,000 is not taxable.

Post office poser

I’m a senior citizen, and had deposited Rs 62,412 in National Savings Scheme. At the time of final withdrawal, the post office deducted Rs 13,496.40 as income tax. Can the post office deduct income tax from a senior citizen’s account?

Navin Singh, Calcutta

There appears to be some confusion — post offices do not normally deduct taxes. And the amount that you say was deducted as tax is too big for your deposit. What is more, you are entitled to a special tax rebate of Rs 20,000. Please check with the post office. If the postal authorities do not have a credible explanation, you could send us the details of your case and we’ll forward it to the regional director of the National Savings Organisation.

If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001