There are various benefits made available to a senior citizen from a higher interest rate for fixed deposits to some savings schemes covering the interests of the senior citizen. But if these income increases from basic exemption tax limits, the senior citizen also has to pay tax, and to avoid this, it is necessary to find out the best tax-saving instruments to minimize the tax outgo once you retire. FinanceShed brings a detailed analysis of the Senior Citizen Savings Scheme, to minimize tax outgo.
What Is The Senior Citizens Savings Scheme?
Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme for Indian residents aged over 60 years. This deposit matures after 5 years of account opening but can be extended by an additional 3 years once the deposit matures. This scheme is available for senior citizens and also for early retirees. You can avail of this product from any post office or public or private bank in the country. Investors can open multiple SCSS accounts if they want to invest more than the maximum limit. Investments are also eligible for a tax deduction of Rs 1.5 lakh under Section 80C of the Income Tax Act. The SCSS interest rate for SCSS is 8.7% which is the highest interest rate among the others in India. As it is a government-backed savings instrument, the terms and conditions applicable to the SCSS are the same, regardless of the bank/ post office, you invest through.
Deposit Limits For SCSS
Depositors are allowed to deposit a minimum of INR 1000 and the deposits exceeding INR 1000 have to be made in multiples of Rs.1000. The maximum limit for SCSS is INR 15 lakhs. Any investor willing to invest in excess of INR 15 lakhs can go for multiple Senior Citizen Savings Scheme Account. You can deposit in the SCSS account in cash for the amount less than INR 1 lakh. Any amount in excess of this should be deposited using the Cheque/demand draft.
Also Read:- Tax saving By Investments
Eligibility For SCSS
In order to get an SCSS account opened you need to be eligible by complying with the following conditions:
- You need to be a resident individual of 60 years of age or above
- If you have retired under superannuation or VRS rules, you can have an SCSS account although you have 55 years but are less than sixty years old.
- SCSS is also available for the retired defense personnel irrespective of the above-mentioned age limits subject to fulfillment of other terms & conditions.
- Non-Resident Indians, Persons of Indian Origin, and members of Hindu Undivided Family are not eligible for SCSS.
Tax benefits available out of Senior Citizen income tax savings Schemes are useful for a taxpayer in various aspects. Investment is so done in a Senior Citizen Savings Scheme account qualify for income tax deduction benefit under Section 80C of the Income Tax Act, 1961. Also, the interest income from the scheme is fully taxable and any interest amount exceeding INR 50,000 is liable to TDS and is applicable from AY 2020-21 onwards.
Retirement is a time when you want to spend more time with your family and travel around the world but this leisure is not as good when you do not have a good tax-saving scheme. Thus, by investing in the Senior Citizen Savings Scheme, you not only take care of your income needs but also reduce your tax burden each year.