How to get better return other than fixed deposits and Post Office MIS

As you have rightly mentioned, monthly SWP from debt funds would be an ideal solution for her. We have done two articles in the recent past which completely highlights these benefits in details. Request you to go through the articles titled Systematic Withdrawal Plans from Debt Mutual Funds give the most tax efficient income https://goo.gl/5CFpdN and https://goo.gl/CWw0Be

However, we have following to suggest on other points of your queries –

1. Interest Income and capital gains are taxable items and the investor should consult a tax consultant and file Income Tax returns if her overall income exceeds the threshold limit in a financial year. Currently senior citizens with annual income of upto Rs. 300,000 Lacs need not pay any tax.

2. In case of SWPs, please note that capital gains tax for each SWP instalment need to be calculated in following manner –

The formula will be (NAV on withdrawal date - NAV on deposit date) X Number of units redeemed X your income tax rate. However, please note that there will be no TDS in case the said senior citizen is a resident Indian.

3. Taxation of Debt Funds post her SWP period - Under the current debt fund tax treatment, capital gains from debt mutual funds investments held for less than three years are taxed as per the income tax rate of the investor. For debt mutual funds investments held for more than three years, returns (long term capital gains) are taxed at 20% after allowing for indexation benefits.

4. Please note that we do not give fund specific advice, but you can choose a fund suitable for her from this link https://goo.gl/wz2EUN or from here https://goo.gl/aB5hP7

5. How monthly SWPs has done in the last three years – You may check the following monthly SWP examples of few funds (Pure Debt funds/ Credit opportunities/ liquid funds) to estimate the returns and the fund value after three years. We have presumed monthly withdrawals of Rs. 6,667 (8% annual rate) done on 10^th of every month with initial investment as Rs. 10.00 Lacs. However, please note that past performance is no guarantee for future returns.

ICICI Prudential Dynamic Accrual Plan https://goo.gl/QzvVES

ICICI Prudential Liquid Fund https://goo.gl/OJB3QU

Birla Sun Life Medium Term Plan https://goo.gl/PlufY5

Birla Sun Life Dynamic Bond Fund https://goo.gl/qbqZCc

DSP BlackRock Income Opportunities Fund https://goo.gl/WuqltO

Reliance Regular Savings Fund (Debt option) - https://goo.gl/nJ3y7Z

Hope the above helps. In case of any further clarification do write to us again. To understand the above better and help the senior citizen, we suggest that you should avail the services of a financial advisor.