Waive income tax on Senior Citizens Savings Schemes’ interest: SBI report1 min read . Updated: 12 Jan 2021, 01:28 PM IST
- If total interest income from Senior Citizens Savings Scheme is more than ₹50,000 TDS is deducted
- However, no TDS will be deducted if form 15 G/15H is submitted
In Budget 2021, the government should make interest income from Senior Citizens Savings Scheme tax-free, SBI economists have suggested in a report. It has also suggested a higher tax-free interest income limit from deposits by senior citizens.
"Government has an excellent scheme for senior citizens. Under Senior Citizens Savings Scheme (SCSS), a senior citizen can deposit ₹15 lakh. However, the interest on Senior Citizens Savings Scheme is fully taxable which is a major drawback of this scheme. We propose full tax rebate of this interest income," says a SBI report.
If total interest income from Senior Citizens Savings Scheme is more than ₹50,000 TDS is deducted. However, no TDS will be deducted if form 15 G/15H is submitted.
"Under 80TTB interest income from deposits by senior citizen (Savings bank accounts, fixed deposits, recurring deposit accounts) up to ₹50,000 is exempted from income tax. This threshold may be increased to ₹1 lakh," the SBI report said.
The Senior Citizen Savings Scheme currently offers an interest rate of 7.4%. An individual above 60 years of age can open a Senior Citizen Savings Scheme account but there are some exemptions to this rule. In special cases, government allows opening of Senior Citizen Savings Scheme by those below the age of 60, subject to some conditions.
Senior Citizen Savings Scheme has a term of five years which can be extended. It has a maximum investment limit of ₹15 lakh per individual.
Retired civilian employees above 55 years of age and below 60 years of age, subject to condition that investment to be made within 1 month of receipt of retirement benefits can also open Senior Citizen Savings Scheme.
Retired defense employees above 50 years of age and below 60 years of age, subject to condition that investment to be made within 1 month of receipt of retirement benefits are also eligible to open Senior Citizen Savings Scheme
Interest under the scheme is payable on quarterly basis and applicable from the date of deposit to 31st March/30th June/30th September/31st December.