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SBI Research has recommended the government to provide full tax rebate on Senior Citizen’s Savings Scheme (SCSS) in the next budget. “Government has an excellent tax saving scheme for the senior citizens.
What is the Senior Citizens Savings Scheme (SCSS)?
Under this scheme, a senior citizen can deposit Rs 15 lakh and the current interest rate is 8.6%. But the interest on SCSS is fully taxable which is a major drawback of this scheme (the interest amount for Rs 1 lakh deposit for 5 years is around Rs 51,000 which is taxable). As per the government report, March 2018 outstanding under SCSS was Rs 38,662 crore. It will be fair if such amount is given full tax rebate as the revenue foregone by the Government could be only Rs 3092 crores, that will have the minimal least impact on Government fiscal deficit as per the reports.
What are the benefits under SCSS?
1. Account under this scheme can be opened by an individual having completed 60 years of age or more.
2. It can also be opened by those who have retired on superannuation or taken VRS at the age of 55 or more but less than 60 years. Recently, the government notified Senior Citizens Savings Scheme 2019, replacing Senior Citizen Savings Scheme Rules 2004.
3. Account matures in 5 years, but it can be extended for three more years after maturity. Currently, Rs 15 lakh deposit in an SCSS account can earn approx Rs 6,45,000 interest in five years. The interest is paid to the account holder every quarter.
Here are the other recommendations by the SBI Research’s Report-
1. An increase in PPF investment limit to Rs 2.5 lakh,
2. Increase in Home Loan interest Deductions to Rs 3 lakh from current Rs 1 lakh and
3. Change in tax rate slab of Rs 5-10 lakh and more than Rs 10 lakh.