Budget 2020: No tax on SCSS! Full rebate on Senior Citizens Savings Scheme – SBI Research proposal

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Published: January 18, 2020 2:02:27 PM

SCSS account Budget 2020 expectations: The SCSS account matures in five years, but it can be extended for three more years after maturity.

tax free scss accountSCSS account can be opened by senior citizens

SCSS Account Budget 2020 Expectations:  SBI Research has suggested the government to provide full tax rebate on Senior Citizen’s Savings Scheme (SCSS) in the upcoming budget. “Government has an excellent scheme for senior citizens. Under the Senior Citizens Savings Scheme (SCSS), a senior citizen can deposit Rs 15 lakh and the current interest rate is 8.6%. However, 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), “SBI Research said in its latest Ecowrap report.

“The Mar’18 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 impact on Government fiscal deficit,” it added.

SCSS benefits

The SCSS account can be opened by an individual having completed 60 years of age or more. 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.

ALSO READ | Senior Citizens’ Savings Scheme (SCSS) 2019: What you can get with Rs 15 lakh

Recently, the government notified Senior Citizens Savings Scheme 2019, replacing Senior Citizen Savings Scheme Rules 2004. Check details here

The SCSS 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.

Other recommendations

The SBI Research’s report has made several other recommendations to the government for the upcoming budget, including an increase in PPF investment limit to Rs 2.5 lakh, increase in Home Loan interest Deductions to Rs 3 lakh from current Rs 1 lakh and change in tax rate slab of rs 5-10 lakh and more than Rs 10 lakh.

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