The government has increased the tax exemption limit under the Senior Citizen Savings Scheme, 2004, to Rs 10,000 from Rs 5,000. Now, no tax will be deducted at source on interest payments, which do not exceed Rs 10,000 during a fiscal.
The change comes into effect from June 1 following a notification to this affect, an official release said here. "No tax will be required to be deducted at source under Section 194A of the Income-Tax Act on interest credited or paid or likely to be credited or paid on deposit made under Senior Citizens Savings Scheme, 2004, where such interest does not exceed Rs 10,000 during a financial year," the release said.
The enhanced limit of Rs 10,000 is also applicable with effect from June 1 to payments of interest by banking companies and co-operative societies engaged in banking. The move is expected to benefit millions of senior citizens who have deposited money under the scheme.
