Finance Minister Nirmala Sitharaman in the budget presented on February 1 hiked investment limits in popular schemes like Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income for India’s elderly to get higher and safer returns on investment. announced to do. According to the 2011 census, the number of people in India who are 60 years or above is around 104 million and financial backup is very important for a secure retirement life of senior citizens. If you are a retired person, how much will this announcement by the Finance Minister help your financial status? Let’s know…
New tax system will increase the investment limit of senior citizen scheme
The government has proposed to double the investment limit in the Senior Citizens Savings Scheme. The new limit will be revised from existing Rs 15 lakh to Rs 30 lakh. At present, you can start investing in Senior Citizen Savings Scheme by depositing a minimum amount of Rs.1000. Senior Citizen Savings Scheme is a popular investment option due to high interest rates, tax benefits and monthly-quarterly interest payouts.
As a government-backed savings instrument, if you are 50 or 60 years old and are a retired employee, you can take advantage of the Senior Citizen Savings Scheme. Senior Citizen Savings Scheme has a tenure of 5 years, which is given the option to extend it by three years. Similarly, under the Post Office Monthly Income Scheme, the deposit limit through single account can be increased from Rs 4.5 lakh to Rs 9 lakh and joint account limit can be increased to Rs 15 lakh.
Tax exemption benefits
Now since both the schemes help in increasing the secure and regular income of the senior citizens, increasing the limit of investment in these savings schemes will give the senior citizens another source of regular income. Apart from this, a tax exemption of Rs 5 lakh has been proposed under the new tax regime in Budget 2023, which can prove beneficial in terms of tax payment.
Advantages of new-old tax system
There are two different systems of income tax in India. These include the old tax system and the new tax system. The old tax regime can give you the benefit of some tax deductions and exemptions, which are not available under the new tax regime. Taxpayers are given an option to choose the tax regime every year. However, no option is provided to taxpayers on business income.
understand the whole thing like this
A senior citizen earns interest from a fixed deposit of Rs 1 lakh. His taxable rental income is 3 lakhs. Considering that he has earned interest at the rate of 8% per annum from the Senior Citizen Savings Scheme. What, then, would be the impact of different scenarios under the new tax regime proposed under Budget 2023?
How to get benefit
Before the budget the senior citizen has deposited Rs 15 lakh and after the budget they will deposit additional amount to the extent of Rs 30 lakh. In such a situation, you will see that there is no possibility of any impact on tax with the current income. Apart from this, there will be no additional benefit from the proposed new tax regime. However, if additional deposits are made, their income increases.
Now if additional amount is deposited in the Senior Citizen Savings Scheme, then they will be benefited under the new tax regime as compared to the old tax regime. Now under the new tax regime, the investor will not have to pay any tax, but under the old tax regime, a tax of Rs 29,120 will have to be paid on additional investment of Rs 15 lakh.
