Easy to Know Senior Citizenship in India:
As per the law, a Senior Citizen in India is defined as any citizen who has reached the age of 60 years or older, a shift from the previous benchmark of 65 years.
Different age criteria applied for various purposes, like railway and flight tickets, but now uniformly stand at 60 years. Under the Income Tax Act, an individual aged 60 and above on the final day of the financial year qualifies as a senior citizen.
For instance, Mr. ‘B,’ born on March 30, 1963, meets the senior citizen criteria for the 2023 financial year. However, had his birthdate been April 2, 1963, he wouldn’t have qualified as a senior citizen for the fiscal year ending on March 31, 2023.
Tax Deductions Available for Senior Citizens
The tax slab for senior citizens is Rs. 300,000, and for other individuals, the slab is Rs. 250,000. Also, there is another slab for persons aged 80 years or more, which is Rs. 500,000.
Important: Top Tax Benefits on Income of Super & Senior Citizens in India
Concerning senior citizens, are authorized to deductions under sections 80C, 80D, 80DD, 80DDB, and 80G.
SCSS (Senior Citizens Savings Scheme) in India
Typically, seniors rely on earnings from savings and investments to sustain their livelihoods. To enhance the welfare and security of senior citizens, the Central Government introduced the Senior Citizens Savings Scheme (SCSS) on August 2, 2004. Key aspects of this scheme include:
i. Who is eligible to invest in SCSS?
Individuals aged 60 years and above are eligible to invest in this scheme. However, there’s an exception for those who opt for voluntary retirement under the Voluntary Retirement Scheme (VRS) between the ages of 55 and 60; they can participate if they invest within 30 days from their retirement date. Non-residents and Hindu Undivided Families are not permitted to invest in this scheme.
ii. Where Senior Citizens Can invest?
Initially, investments could be made in any post office savings bank deposit account in India. However, starting from October 27, 2004, investments became possible in any bank accepting deposits under the Senior Citizens Savings Scheme.
iii. Can you tell me the maximum amount that I can invest?
This scheme allows depositors to open multiple accounts and deposit a minimum of Rs. 100 or in multiples thereof. Until the financial year 2022-23, the cumulative investment across all accounts should not exceed fifteen lakhs.
However, starting from the financial year 2023-24, this limit has been raised to thirty lakhs, as announced in the Central Government’s 2023 budget.
Within a calendar month, a depositor is restricted to opening only one account. To initiate a deposit account, the depositor must furnish their date of birth along with a self-attested copy of the birth certificate and a copy of their Permanent Account Number (PAN).
If the depositor is not assessed for income tax, a self-declaration is required. Additionally, if both the depositor and their spouse wish to open accounts in the same post office, they can collectively invest up to thirty lakhs each.
iv. What is the facility for joint accounts and nominations?
Depositors have the option to open an account in their name or jointly with their spouse, with a provision to nominate someone else.
v. The Interest Payable on Deposits is as Follows:
Interest payments occur quarterly, scheduled on June 30th, September 30th, December 31st, and March 31st each year. The Central Government announces the interest rate every quarter, currently standing at 8.2%. Depositors can opt to have the interest credited to their savings bank account, which includes a chequebook facility and a passbook.
vi. Withdrawals From a Deposit Account are Limited in Time:
The account has a 5-year tenure during which no withdrawals are permitted. However, depositors have the choice to extend this duration by an additional three years beyond the initial 5-year term. Should a depositor wish to close the account, specific conditions must be met:
- If between one to two years the account gets closed then a deduction of 1.5% of the deposit amount shall be applicable and the remaining amount including interest till the closure date shall be provided to the depositor.
- When the account gets closed post 2 years then a 1% deduction of the deposit amount shall be applicable and the remaining amount including the interest till the closure date shall be provided to the depositor
vii. What is the Possibility of a Deposit Transfer?
When in case there is any amendment in the address of the depositor then the account might be transferred to the other post office with the application of transfer and residence proof. Rs 5 shall be levied on the transfer of per lakh rupees.
viii. It is possible to Deduct Under 80C.
In this scheme, the invested amount qualifies the depositor for the deduction under section 80C of the Income Tax Act.
ix. Taxes are Charged on Interest on Deposits.
Interest earned on deposits is liable for tax deduction at source under Section 194A of the Income Tax Act when the interest amount surpasses fifty thousand rupees.
x. The Provision of Tax Deducted at Source on Interest:
Interest earned through deposits held at a post office or bank is subject to tax deduction at source under Section 194A of the Income Tax Act if the interest earned exceeds fifty thousand rupees.
This entails that the post office or bank is mandated to deduct TDS (Tax Deducted at Source) at the applicable rate if the interest earned crosses the specified threshold of fifty thousand rupees.
xi. TDS is not required for Form 15H:
Form 15H serves as a declaration under Section 197A of the Income Tax Act, allowing senior citizens to furnish it to banks and financial institutions. This form aims to prevent tax deduction at source (TDS) on their income, provided their total income remains below the taxable limit.
When Form 15H is been submitted by a senior citizen to the bank or the financial institution then it shows that their income does not get taxed and as a consequence, no tax must be deducted at source.
The same Form assists the senior citizens and prevents the TDS on the income of interest and furnished that they should fulfil the stated conditions. It moreover acts as a declaration that a person’s total income is less than the taxable limit and hence the Tax Deducted at Source must not be applicable.
Blog Summary
Mastering the nuances of senior citizenship in India involves grasping legal frameworks and making prudent financial choices. The Senior Citizens Savings Scheme (SCSS) stands out as a valuable avenue, offering stability and tax advantages.
By delving into tax intricacies, and investment avenues, and leveraging tools like Form 15H, seniors can fortify their financial footing during their later years.
