In its report, SBI Research has suggested the government to provide complete tax relief on SCSS in its Budget 2020. In its latest Ecowrap report, SBI Research says, . "Government has an excellent scheme for senior citizens. Under the Senior Citizens Savings Scheme (SCSS), a senior citizen can deposit Rs 15 lakh and the current interest rate is 8.6%. However, the interest on SCSS is fully taxable which is a major drawback of this scheme (the interest amount for Rs 1 lakh deposit for 5 years is around Rs 51,000 which is taxable)".
"The Mar'18 outstanding under SCSS was Rs 38,662 crore. It will be fair if such amount is given full tax rebate as the revenue foregone by the Government could be only Rs 3092 crores, that will have the minimal impact on Government fiscal deficit," it added.
The SCSS account is for senior citizens aged 60 years and above. Also those of whom who have retired on super annuation or taken VRS scheme at 55 years of age or more but less than 60 years.
The account comes with 5 years maturity and can be extended for 3 more years after maturity. Currently, Rs 15 lakh deposit in an SCSS account can earn approx Rs 6,45,000 interest in five years. The interest is paid every quarter to the account holder.
Also, on the sidelines, the government has made several other recommendations such as an increase in PPF limit to Rs. 2.5 lakh, increase in home loan interest deduction to Rs. 3 lakh as well as rejig in tax slab rs 5-10 lakh and more than Rs 10 lakh.