How is Senior Citizen Savings Scheme (SCSS) taxed in the New Tax Regime?

Senior Citizen Savings Scheme (SCSS) is popular among senior citizens for providing a guaranteed income every quarter. The taxation of this scheme varies between the old and new tax regimes. This article will help you understand the difference.

In the old tax regime, SCSS depositors can claim a deduction of up to ₹1.5 lakh/year under section 80C of the Income-Tax Act, 1961. This deduction is available against the amount invested in the SCSS account.

The new tax regime, however, doesn't allow the benefit of deduction available under section 80C.

Currently, income from this scheme is liable to taxation at the respective slab rate of the depositor under both the old and the new tax regimes.

In the new tax regime, a senior citizen cannot claim a deduction of up to ₹50,000/year under section 80TTB.

Is SCSS relevant in the new tax regime?

SCSS is not only a tax-saving scheme. It is a savings scheme that offers guaranteed returns per quarter. The current interest in SCSS is 8.2%, which is higher than most of the fixed deposits offered by banks.

From the next financial year, SCSS will become more lucrative for a senior citizen whose total income is less than ₹12 lakh. Given these features, one can say that SCSS remains relevant even in the new tax regime. However, whether one should invest in the SCSS scheme or not is an individual's call.