Tax Savings: Senior citizens can avail tax exemption up to ₹ 1.5 lakh, Check Scheme Complete Details

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Tax Savings in FY25, SCSS: The objective of SCSS is to provide a regular income to senior citizens after retirement. In this scheme, taxpayers can claim tax deduction on deposits up to Rs 1.5 lakh every year under Section 80C.

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Tax Savings in FY25, SCSS: Government Scheme Senior Citizen Savings Scheme (SCSS) is a better scheme for tax savings of senior citizens. This scheme is for Indian citizens above 60 years of age. The objective of SCSS is to provide a regular income to senior citizens after retirement. Under the scheme, taxpayers can claim tax deduction by depositing up to Rs 1.5 lakh every year under Section 80C. Let us tell you, currently there are two types of tax regimes in the country. New tax regime and old tax regime. Tax deduction of section 80C can be claimed only in the old tax regime.

SCSS is available in government/private sector banks and post offices. Being a government scheme, the returns on it are guaranteed. The deposit amount matures after 5 years from the date of opening of SCSS account, but this tenure can be extended only once for 3 more years. From January 1, 2024, this scheme is offering 8.2 percent interest annually.

Under SCSS, interest is paid every three months, ensuring maturity of your investment. Interest will be credited on the first day of every April, July, October and January.

SCSS: How much tax will be saved?

SCSS has a better tax exemption scheme. Tax exemption can be claimed under Section 80C of the Income Tax Act, 1961 on annual deposits up to Rs 1.5 lakh in SCSS. Tax liability on interest received on SCSS will be as per the tax slab applicable to individuals. If the interest income in a financial year is more than Rs 50,000, then Tax Deducted at Source (TDS) will be deducted. Investment in SCSS is applicable from 2020-21 onwards till TDS deduction. If the interest income does not exceed the prescribed limit, then you can get relief from TDS by submitting Form 15G/15H.

Where will the account be opened, what is the maximum deposit?

The minimum deposit in SCSS is Rs 1,000. Whereas maximum Rs 30 lakh can be deposited. Senior Citizen Savings Scheme account can be opened in any authorized bank of the country or in all Indian post offices. For this, the account opening form will have to be filled and submitted along with the copy of KYC document, which includes passport size photograph along with identity card, address proof and age proof.

Under SCSS, a person aged 60 years or more can open an account. If someone is 55 years or more but less than 60 years and has taken VRS, then he can also open an account in SCSS. But the condition is that he will have to open this account within one month of receiving the retirement benefits and the amount deposited in it should not be more than the amount of retirement benefits.

Know mature and pre-mature rules

Please note that SCSS account will be closed in case of death of the account holder before maturity and all the matured income will be transferred to the legal heir/nominee. For death claim, the nominee or legal heir will have to submit a written application in the prescribed format along with the death certificate to facilitate account closure.

Nomination facility is available at the time of opening and closing of accounts in Senior Citizen Savings Schemes. This account can be transferred from one post office to another. In this the account holder can do premature closure. But no interest will be given if the post office account is closed within 1 year of opening. If interest has been paid, it will be recovered from the principal amount. On closing the account after 1 year and before 2 years, 1.5 percent of the deposit will be deducted. Whereas if the account is closed after 2 years of opening and before 5 years, 1 percent of the deposit amount will be deducted from the principal amount.

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