The Government has extended the benefit of Section 80C of the Income Tax Act to the Senior Citizens Saving Scheme (it carries 9 per cent interest) and five year Post Office Time Deposit (bearing interest of 7.5 per cent) account from April 1, 2007. Also 5 per cent bonus will be paid on the Post Office Monthly Income Scheme (POMIS) at the time of repayment on maturity. The effective yield is 8.9 per cent.
It may be worthwhile to make these savings schemes totally tax free under Section 10 of the Income Tax Act like PPF at least for senior citizens. And bonus on POMIS may be offered at 10 per cent, which was earlier the rate under this scheme.
Also the age limit for senior citizens may be reduced from 65 years to 60 for all income-tax purposes.