Senior citizens need not pay taxes on NSS withdrawals anymore
What's the story
In a major relief for senior citizens with old National Savings Scheme (NSS) accounts, Finance Minister Nirmala Sitharaman has announced a tax exemption.
The new provision, which is part of the Budget 2025, will be applicable for withdrawals made from these accounts on or after August 29, 2024.
This will cover both the principal amount deposited under the scheme as well as interest earned on it.
Scheme overview
A safe investment option for citizens
The NSS schemes are government-backed financial instruments aimed at encouraging savings among citizens, especially those in lower-income brackets.
Since they are backed by the central government, these schemes are widely considered risk-free, making them an attractive option for lower and middle-income groups.
The government also offers tax benefits on these schemes to encourage further investment.
Government's strategy
A tool for government borrowing
The NSS schemes are a way for the government to borrow money from the public.
They include schemes like the post office savings account, public provident fund (PPF), national savings certificates, and Kisan Vikas Patra (KVP).
These are operated via authorized financial institutions like banks and post offices.
The money raised through these schemes is included in the government's revenue receipts under the Union Budget.