Senior Citizen Savings Scheme: Currently the investment in this scheme provides tax deduction under 80C, but the interest income is fully taxable.
SBI Economists in their report have given many important advice to the government regarding small saving schemes. In its report, SBI says that the government has taken the right decision to withdraw the interest rate cut on these savings schemes. Apart from this, many important suggestions have also been made to woo investors towards these schemes. One of these major suggestions is about the Senior Citizen Savings Scheme.
In its report, SBI economist said that the government should make interest income tax-free on Senior Citizen Saving Schemes. Right now, interest income comes under the purview of tax. They say that according to the data of February 2020, a total of 73725 crore rupees were deposited in SCSS. If the government makes the interest income completely tax-free to a extent, then there will be little impact on the state exchequer.
The Senior Citizen Saving Scheme currently offers an interest of 7.4 per cent annually. However, the interest is reviewed on quarterly basis by the Finance Ministry. Maximum 15 lakh rupees can be deposited in this scheme. A minimum of 1000 rupees or more can be deposited in its multiple.
The maturity of this scheme is 5 years and after maturity it can be extended for 3 years. This scheme can be availed only after the completion of 60 years of age. Investment in this scheme gives benefit of deduction up to 1.5 lakh under section 80C. However, the interest income is fully taxable. If the interest income in a financial year is more than 50 thousand, then TDS will also be deducted. If someone invests 15 lakh rupees in this scheme right now, then 9250 rupees will be received as interest every month.