Senior citizens get tax exemption on National Savings Scheme withdrawals

Finance minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman has announced a tax exemption for senior citizens with old National Savings Scheme (NSS) accounts.

The Budget 2025 proposes to provide exemption on the withdrawals made from the National Savings Scheme (NSS) on or after the August 29, 2024, for any amount deposited under the scheme and the interest accrued thereon in respect of which a deduction has been allowed, the minister said told Parliament on February 1.

National Savings Schemes are government-backed financial instruments aimed at encouraging savings among citizens, especially among the lower-income groups.

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Backed by the Centre, these schemes are largely considered risk-free, making them an attractive option for lower or middle-income groups. The government also offers tax benefits on such schemes to encourage more investment.

These schemes help the government to borrow money from individuals. These schemes include the post office savings account, national savings certificates, public provident fund (PPF) and Kisan Vikas Patra (KVP). The National Saving Schemes are operated via authorised financial institutions like banks and post offices.

The investments through these schemes form a part of the government’s revenue receipts under the Union Budget.