Tax exemption limit enhanced to Rs 10,000 under senior citizens savings scheme

The Government has enhanced the threshold limit for exemption from deduction of tax at source from Rs. 5,000 to 10,000 on interest on any deposit under Senior Citizens Savings Scheme, 2004. The enhanced threshold limit of ten thousand rupees has come into force from 1-6-2007. This notification has been issued pursuant to an amendment made to section 194A of the Income-tax Act, 1961 by the Finance Act, 2007.

By virtue of the aforementioned notification, 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 any deposit made under Senior Citizens Savings Scheme, 2004 where such interest does not exceed ten thousand rupees during the financial year.

The move is expected to benefit many senior citizens who have made deposits under the said Scheme. The enhanced limit of ten thousand rupees is also applicable with effect from 1.6.2007 to payments of interest by banking companies and co-operative societies engaged in the business of banking.

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