INDIA: Government Issues Clarification on Senior Citizens Savings

NEW DELHI (Press Information Bureau), June 23, 2006: The Ministry of Finance of the Government of India has issued following clarifications regarding Senior Citizens Savings Scheme: A. An individual resident in India of sixty-five years of age or above may furnish a declaration in Form No. 15H to the bank/ post office if the tax on his estimated income for the financial year is nil. B. A declaration in Form No. 15G can be furnished by a depositor of less than sixty-five years of age if- a. the tax on his estimated total income for the financial year is nil and, b. the aggregate amount of interest credited or paid or likely to be credited or paid during the financial year is not more than the maximum amount which is not chargeable to tax (Rs.1,00,000/- for male taxpayers and Rs.1,35,000/- for a woman taxpayer). Note: Both the above conditions are required to be fulfilled. The information relating to deposits under the Senior Citizens Savings Scheme, 2004 may be given by the depositors in Schedule III of Form No.15-G. C. On furnishing of a declaration in Form 15H or Form No. 15G to the bank/ post office, no deduction of tax shall be made by the bank/ post office. D. In suitable cases a certificate for lower deduction or no deduction of tax at source under section 197(1) may also be obtained by the depositors from their assessing officers. Banks and post offices have been advised that such portion of the tax not deducted by them during 2004-05 and 2005-06, which has been paid directly by the depositors as advance tax or self-assessment tax or otherwise and for which necessary evidence is furnished by the depositors to the bank/post office, will not be recovered by the Income Tax Department from the banks/ post offices. Similarly, to the extent of the amount for which declarations in Forms No. 15H and 15G as well as certificates under section 197(1) are available with the bank/ post office, the Department would not make recovery from the bank/ post office. The interest accruing on the deposits held under the Senior Citizens Savings Scheme, 2004 is taxable as per the provisions of the Income Tax Act, 1961 and is also liable for tax deduction at source (TDS) as per the provisions of section 194A of the Act. Clarifications had been sought from the Government as to whether declarations made by the depositors under SCSS in Form No. 15H and Form No. 15G of the Income Tax Rules may be accepted by the banks and post offices. Moreover, clarifications had also been sought on the recovery of TDS pertaining to financial years 2004-05 and 2005-06 in the current year. After examination of the issues the Government has issued the above clarifications.