…So can the interest income in Senior Citizen Savings Scheme be completely tax free?

New Delhi. The Central Government has recently fixed the interest rates of Small Savings Scheme for the April-June quarter. Interest rates on all these schemes including Public Provident Fund (PPF) and National Savings Scheme (NSC) have been reduced by 0.70 percent to 1.40 percent. But amidst all this, in the research report released by SBI, the government has been suggested to make the interest income on Senior Citizen Savings Scheme (SCSS) completely tax free. According to the research report, reduction in interest rates will have a big impact on the savings of senior citizens because their regular income will reduce.

That’s why there should be exemption in Senior Citizen Savings Scheme

(I) SBI report says that rate cut in small savings schemes has a big impact on elderly people. According to the assessment given in the SBI Ecowrap report, there are about 4.1 crore senior citizen term deposit accounts in India in which total deposits are Rs 14 lakh crore.

Let us tell you that the government has reduced the interest rate of SCSS scheme from 8.6 percent to 7.4 percent. That is why it is important that the government exempts interest income from tax, especially for the Senior Citizen Savings Scheme (SCSS).

(II) Reduction in interest on small savings schemes was mandatory. Since small savings schemes come with a 10-year government guarantee, the rate cut will reduce the difference between small savings and bank rates. The report said that even at present the interest rates on small savings schemes are better than bank deposits.

(III) The number of senior citizen term deposits in the country is 4.1 crore with total deposits of Rs 14 lakh crore. At the same time, the size of deposits per account is around Rs 3.3 lakh and interest income from such deposits constituted 5.5 percent of the final personal expenditure in FY 2019. Let us tell you that under the SCSS scheme, up to Rs 15 lakh can be deposited in the senior citizen account.

Special features of Senior Citizen Saving Scheme

(1) The maximum amount of deposit in SCSS can be either the amount received on retirement or Rs 15 lakh. Whichever amount is less among these two, it can be invested in SCSS.

(2) If you are 60 years old and have retired from job, then you can invest in this scheme. Single or joint account can be opened under SCSS. Investment can be made under SCSS in post office or any bank. According to SCSS, up to Rs 15 lakh can be invested in it by opening a joint or single account.

(3) The amount invested in SCSS should not be more than the amount received on retirement. To open an account in SCSS, if you are investing up to Rs 1 lakh, then you can give it in cash. If this amount is more than Rs 1 lakh then you will have to deposit it in the form of cheque.

...So can the interest income in Senior Citizen Savings Scheme be completely tax free?

(4) The Finance Ministry of the Central Government reviews the interest rate of SCSS every three months. In SCSS, interest is calculated every quarter. Accordingly, interest amount is deposited in your account on 31st March, 30th June, 30th September and 31st December. At present interest is being given at the rate of 7.4 percent.

(5) The duration of SCSS is 5 years and it can be extended for three years. If you withdraw money from SCSS account prematurely, you may have to pay some fees for it.

(6) According to SCSS 2019, after maturity of the account, it can be extended for 3 years. In SCSS, you will get the same interest rate which was available at the time of maturity of the account.

Tags: business news in hindi, PPF accounts, Small Savings Schemes

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