TDS relief for senior citizens; exemption limit raised
June, 05th 2007
Revised limit also to apply for time deposits in banks
Senior citizens who have made deposits under the Senior Citizens Savings Scheme will not be subjected to tax deduction at source (TDS) on interest earnings up to Rs 10,000 in a financial year.
This is because the Government has raised the threshold limit for exemption on TDS on the interest paid under this scheme to Rs 10,000, from the current level of Rs 5,000 in a financial year.
The Senior Citizens Savings scheme was launched in 2004 and offered 9 per cent interest to depositors aged 60 years and above.
A depositor can invest a maximum of Rs 15 lakh in the scheme, which has a lock-in period of five years.
Apart from the Senior Citizen Scheme, the Finance Ministry has also now hiked the threshold limit for TDS exemption for interest (other than interest on securities) paid by banking companies and cooperative societies engaged in the banking business.
The threshold limit has been pegged at Rs 10,000 as against the earlier specified amount of Rs 5,000 in a financial year.
The enhanced limit of Rs 10,000 would be effective from June 1, an official release said here on Monday. The move to raise the threshold limit, which was announced in Budget 2007-08, is expected to benefit a large number of fixed deposit holders and senior citizens.
With the threshold limit now raised, banking companies and cooperative societies engaged in banking need not deduct tax at source on their interest payments up to Rs 10,000 in a financial year to an Indian resident.