Tax exemption limit enhanced for senior citizens savings scheme

New Delhi, June 4 (UNI) The Government today announced enhancement of 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 Rs 10,000 has come into force from June 1, 2007.

This has been done by notification SO No.861 (E) dated June 1,2007. The 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 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 Rs 10,000 during the financial year.

The move is expected to benefit many senior citizens who have made deposits under the Scheme.

''The enhanced limit of Rs 10,000 is also applicable with effect from June 1, 2007, to payments of interest by banking companies and co-operative societies engaged in the business of banking,'' an official release said here.

UNI