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Sep,25,2025, 14:00 hrs
Investment avenues for senior citizens.
Balwant Jain , Tax and Investment Expert
guest: Sir, I am a senior citizen and have invested in HDFC Balance Advantage Fund-Dividend. Now that dividend income is taxable in the hands of investors at an applicable rate . I want to redeem it and invest it in a fund where I can start swp. Request you to kindly suggest the suitable fund where I can start swp and protect the capital invested also.
:
It seems you want regular income. I would advise you to invest 30 lakhs in senior citizen saving scheme and balance in RBI floating rate saving bonds in that order.
guest: Can one claim deduction of Rs 1.50 lakh each year on the same amount deposited under Senior Citizen Saving Scheme one time i.e. If I had invested 15 Lakhs in the year 2024-2025, can I claim deduction of Rs. 1.50 lakh in the year 2024-2025, 2025-2026, 2026-2027 on the same amount invested in the year 2024-2025? Please clarify.
:
The deduction for Senior Citizen Saving Scheme is available in the year in which you make the deposit. Since the maximum limit of deduction under Section 80 C is Rs. 1.50 lakh, you can not get a deduction of more than 1.50 lakh in one year even if you deposit more money. So you can make the deposit under senior citizen scheme in such a way that you are able to claim deduction of Rs. 1.50 lakh every year if it suits you. The deduction under section 80C is available if you opt for old tax regime.
guest: My father has just retired. He`s looking for the Senior Citizen Saving scheme for investment. Is this scheme bank specific? Does the interest rate vary bank to bank?
:
SCSS is a government scheme and the rate of interest is the same irrespective of where you open the account. So he can open the account under SCSS with any authorized bank or post office.
guest: Are RBI Floating rate Saving bonds available round the year? Should one have to have a Demat acct for buying RBI Bond?
:
Yes. The bonds are available round the year. You do not need a demat account for it.
guest: In view of falling rates and expectations that interest rates will further fall is it better to invest in say ICICI Bank senior citizen FD at 6.3% fixed return for any period between 5 to 10 years or invest in RBI Floating rate bonds, presently offering 7.15% return for the present quarter, but having a risk of lower returns due to expected fall in rates. SCSS limits are already exhausted. Corpus of investment 50 Lakhs.
:
The interest on ICICI deposits will always in all probability will remain lower than these schemes.
guest: My mother had a Senior Citizen Savings Account in her single name with her son as the nominee. One deposit was made in the account during the current year to avail of 80C tax benefit. She passed away in the same year. We have to file ITR for the current financial year and need to claim the 80 C deduction. So, should we close the SCSS Deposit after 1st. April so that there is no issue for the 80C deduction? We will have to forgo the interest for all SCSS Deposits since we were told that interest payment stops on the date of demise of SCSS Depositor.
:
As per Section 206AA the bank is obliged to deduct tax @ 20% on the interest even if your mother has submitted form No. 15H as your mother does not have PAN number,. A senior citizen can submit from No. 15 H if the total tax on her income is nil. So in case there is no tax liability after taking into account deduction under Section 80 C, a senior citizen can submit form no. 15H. The bank cannot accept any proof in support of your claim under Section 80 C while deducting the TDS. For claiming the refund of tax already deducted by the bank it is necessary to file her income tax return (ITR). Please note, your mother can not file her ITR in case she does not have a PAN or an Aadhaar. However in case she has an Aadhaar Number, the same can be used in place of PAN and submit the same to the bank with a request to revise the TDS return submitted by them to mention PAN/Aadhaar number against her name. Unless the bank carries out this correction, your mother will not be able to get the credit for the tax deducted by the bank. Moreover even if your mother submits from No. 15H she has to furnish her PAN/Aadhaar , failing which the bank will again deduct tax @ 20% on the whole of the interest. Please note that it is not mandatory for you to file your income tax return in all the cases where the person has a PAN.
guest: As a senior citizen I have invested 7 lakhs in SCSS with the post office. Previously I used to withdraw quarterly interest in cash from the Post office. Now the post office has discontinued the cash withdrawal system. Now they deposit the interest in a post office Savings Bank account from where one can withdraw later on. As my wife has got a S.B A/C in P.O in her name, second name being mine (E or S) they have not allowed me to open another SB a/c with my name as first name. Under the circumstances they are crediting my SCSS interest in our joint A/c. My wife’s interest from the MIS scheme is also credited in the same a/c. My wife is a retired person and regularly submits her IT return. As she couldn’t show my SCSS income in her return, how can it be dealt with? Incidentally my yearly income is below 3 lakhs per year permissible for senior citizens as non taxable.
:
There is no problem in this arrangement. The interest credited in respect of your SCSS account need not and cannot be added to the income of your wife and it is to be included in your taxable income only in case you file your ITR. So whatever you are doing is perfectly legal and nothing to worry.
guest: My mother, who is a senior citizen had made fixed deposits with banks and earned interest of Rs. 3.5 lakhs last year, which crossed the income tax exemption limit of Rs. 3 lacs. So she opened an account under Senior Citizen Savings Scheme and deposited Rs. 75,000 to avail the benefit of Section 80C. She had given 15H form also for no deduction of tax but the bank has deducted tax of Rs. 70,000 (20%-without PAN) from her interest on fixed deposits. The bank has advised us to file an income tax return for claiming the refund. Is it not possible for the bank to accept 80C proof and not deduct tax as she does not have any tax liability? Does my mother need to file IT return to get the amount back? She does not have a PAN card. Is it possible to file a return without a PAN card?
:
As per Section 206AA the bank is obliged to deduct tax @ 20% on the interest even if your mother has submitted form No. 15H as your mother does not have PAN number,. A senior citizen can submit from No. 15 H if the total tax on her income is nil. So in case there is no tax liability after taking into account deduction under Section 80 C, a senior citizen can submit form no. 15H. The bank cannot accept any proof in support of your claim under Section 80 C while deducting the TDS. For claiming the refund of tax already deducted by the bank it is necessary to file her income tax return (ITR). Please note, your mother can not file her ITR in case she does not have a PAN or an Aadhaar. However in case she has an Aadhaar Number, the same can be used in place of PAN and submit the same to the bank with a request to revise the TDS return submitted by them to mention PAN/Aadhaar number against her name. Unless the bank carries out this correction, your mother will not be able to get the credit for the tax deducted by the bank. Moreover even if your mother submits from No. 15H she has to furnish her PAN/Aadhaar , failing which the bank will again deduct tax @ 20% on the whole of the interest. Please note that it is not mandatory for you to file your income tax return in all the cases where the person has a PAN.
guest: I am a super citizen. My 15 lakh deposit in Senior Citizen Scheme 2004 in IDBI Bank matured on 20 June 2025 after a tenure of 5 years. On my request, the matured amount was transferred to my savings account. The amount is still in my savings account. Now I learned that the account can be extended by another term of 3 years. Sir, can this matured account be revived and extended for 3 more years?
:
No. You cannot do it now but can place a new deposit for 5 years of up to 15 lakhs. Anyway the old deposit would have been renewed at the current prevailing interest rate only.
guest: I have retired at the age of 48 and got my pf dues after 3 years from the date of retirement last week. Can I invest in a senior citizen savings scheme now that I’m retired and one month from receipt of pf is not over yet? If not now can I invest when I attain the age of 55 ?
:
For investing in SCSS scheme before 60 years of age one has to fulfill two conditions. 1. The age is not less than 55. 2. Investment is made within one months from receipt of retirement benefit. Since second condition would not be satisfied when you satisfy the first condition, you would not be eligible at the age of 55 but before 60. However you are eligible for investing in this scheme anytime you turn 60 irrespective of source of your funds.
guest: I am a senior citizen. My accursed interest on FDs with a bank crossed Rs 50000, limit for senior citizens. The bank has deducted TDS on the full amount of interest. Is it correct as under 80 TTB interest upto Rs 50000 is exempt?
:
Senior citizens enjoy an overall deduction of Rs. 50,000/- on interest from specified institutions under Section 80TTB if old tax regime is opted. This limit is for interest from all these entities. Moreover no TDS is effected on interest paid to senior citizens as long as the same does not exceed Rs. 50,000/- for each bank but once the threshold is crossed, TDS has to be applied on total interest. TDS threshold and 80TTB threshold are two different things.
guest: I am a senior citizen and have interest income under a senior citizen saving scheme as well as Savings bank. I also have accrued NSC interest. Can all these interests be claimed under Section 80TTB as exempt within 50000?
:
Senior citizens enjoy an overall deduction of Rs. 50,000/- on interest from specified institutions under Section 80TTB if old tax regime is opted. This limit is for interest from all these entities. Moreover no TDS is effected on interest paid to senior citizens as long as the same does not exceed Rs. 50,000/- for each bank but once the threshold is crossed, TDS has to be applied on total interest. TDS threshold and 80TTB threshold are two different things.
guest: I want to know about the senior citizen saving scheme whether I can open an account multiple times or not, like first time for 5 years with 3 year extension and after maturity of account should I be eligible to open account again for a term of five years or it is a single time investment.
:
Yes. You can open as many accounts as you want and as many times as you want as long as aggregate of deposits in all accounts does not exceed 30 lakh rupees at any given point of time.
guest: For a retired senior citizen, what are the investment avenues available. I understand one can invest only 20 to 25% of the available resources in equities and rest in secured investments. Can you please suggest some investment options which can be safe , give steady income and most importantly have liquidity (can be withdrawn any time without lock in periods ) specially for retired and for a Senior Citizen.
:
For a retired senior citizen there are products with lock in like senior citizen saving scheme, RBI floating rate saving bonds which are secure and give better returns. However if you want liquidity and safety both, go to Gilt scheme of mutual fund. Part of your investment can also be made in conservative hybrid fund schemes of the mutual fund where some portion is invested in equity (10-15%) in an attempt to better the returns while protecting the capital.
guest: I have taken VRS from Central Government Public Sector Undertaking. I am 55 Years old. Since the PF amount with interest is fully exempt from Income Tax at the time of retirement / VRS, kindly let me know if you invest this amount in FDs again for that is the only source of income whether the interest earned will be subject to tax again. Please also suggest some safe investment avenue so that the capital invested will be safe with a reasonable rate of return.
:
Though the money received from provident fund account is fully exempt, any interest income which arise on investment of these funds in bank fixed deposits is fully taxable. Since you have taken VRS you can invest upto Rs. 30 lakh rupees of your retirement money in Senior Citizen Savings Scheme within three months of your retirement. This scheme is for five years and can be extended for another three years. The present rate of interest on this scheme is 8.2%. Since your only source of income is bank interest you can file ITR 1. Since you need monthly income I do not think of any product suitable for you. Interest received on investments made of your PF money in fixed deposits is taxable. You can invest in RBI floating rate saving bonds for seven years presently giving you interest at 7.15%. These investments are fully risk free.
guest: When we buy RBI floating rate bonds and when a new rate is announced by the RBI, whether that new rate is applicable for New incremental investments or even the existing investments?
:
The new rate announced every half year will apply to existing investments as well.
guest: I am retiring in Mar 2026 with a pension of approx. Rs. 70,000/- pm and lump sum payment of Rs. 95 lakhs. I have a liability to pay bank loan EMI of Rs. 35000/- pm for next 4 years. I anticipate a monthly expense of Rs. 70000/-pm. I want a return of a deficient amount from the corpus of Rs. 95 lakhs. Kindly advise suitable tax free instruments?
:
At present there is no tax free instrument available. However, you can buy tax free bonds issued by various Public Sector Units and RBI, available on stock exchange. You can invest 30 lakhs in Senior Citizen Saving Scheme which offers you a better rate of 8.20%. The balance can be invested in RBI floating rate saving bonds. In the present circumstances these are the best option possible looking at the fact that you cannot risk your capital.
guest: Can someone open senior citizens savings scheme after 55 if he/she is self-employed?
:
No. One can only open an account under Senior Citizen Savings Scheme (SCSS) after completing 60 years of age. Those who have taken early retirement can open account under SCSS any time after 55 buy only within one month from receipt of the retirement benefits with relevant documentary evidence. Those who have retired from military can also likewise open account under SCSS any time with the retirement corpus.
guest: For senior citizens what are the schemes available for regular income.
:
One can invest upto Rs. 30 lakhs in senior citizen savings scheme for five years with interest rate of 8.20%. A resident individual can invest in RBI floating rate saving bonds without any limit which are equally safe and at the same time offer you better returns than other similar products available in the market. These bonds have a tenure of 7 years. Presently these bonds offer 8.05% annual interest. The interest is payable half yearly and the rate is bench marked against interest on national saving certificates. It will be 0.35% higher than interest on NSC. The interest is rest half yearly.
