Query]

I am Senior Citizen. My spouse also becomes Sr. Citizen recently. You might be aware that bank interest rates have fallen drastically since last 3 to 4 yrs by almost over 3.0 percentage points. Those middle class families surviving only on bank FD interest are finding it difficult to make both ends meet. SCSS 2004 is one scheme of Govt. of India which gives some relief though not matching interest rates which were few years ago.
You are aware that in SCSS a Sr. Citizen can open account jointly with his spouse up to Rs. 15 Lakh bearing interest presently 8.60%. Similarly, he can open another account up to Rs 15 Lakh with Spouse as the first applicant and himself as second applicant i.e., Total Rs 30 Lakh can be invested though funds in both cases may belong to the husband only. My queries are;

1. Is the interest income from second account is her income only or it is required to be clubbed?
2. Now, if even after clubbing both incomes, if my total income is below the taxable limit, can I submit Form 15H to bank to avoid TDS? If yes, in whose name form No. 15H in second case is to be filled since my wife is first applicant? Whether bank need to be given such letter stating that though my spouse is first applicant, the funds are owned by me. Please guide.
3. Also if total clubbed income before claiming deductions and exemptions like Rs 50,000/- interest exemption exceeds Rs 3 Lakh by say Rs. 30,000/-, whether I can submit 15H to avoid TDS as after exemptions the income is well below Rs 3 Lakh (Limit of taxable income for Sr. citizen)? [satish_palewar@rediffmail.com]

Opinion:

1. Since the fund belongs to you, Income arising to your wife out of the said amount will be required to be clubbed with your income in view of the clubbing provision of section 64(1)(iv) of the Income Tax Act-1961.
2. As the income is required to be clubbed in your hands, Form No. 15H for investment in the name of your wife is required to be given by you. Form No. 15H may be submitted to the payer along with a declaration that the fund belongs to you and the income is subject to the clubbing provisions in your hands. It may be noted that Form No. 15H is having a verification column wherein the person singing it is required to declare that the income belongs to the self and not subject to the clubbing provisions. Hence, the declaration form No. 15H cannot be signed by your wife but can be given by you only.
3. Whether Form No. 15H can be given if income before deductions/exemptions is above the basic exemption limit?
   Form No. 15H is a declaration form whereby a senior citizens needs to declare that the final tax liability of the person signing is Nil. In short, if after all deductions and exemptions, the total tax liability is Nil, the depositors can give declaration in Form No. 15H.
   Readers may note that Form No. 15H is for senior citizens whereas Form No. 15G is for non senior citizens. Form No. 15H can be given even if income is above the basic exemption limit but after all deductions / exemptions etc, the tax liability becomes nil. However, Form No. 15G can be given only if the income before deductions under chapter VI-A (like deductions towards LIC/PPF U/s 80C, Mediclaim U/s 80D, Interest on saving bank accounts/deposits u/s 80TTA or 80TTB etc) is below the basic exemption limit.

There are two other features of Senior Citizens Saving Scheme (SCSS) which is not known to lot many readers:

1. Investment in SCSS can be done by an individual who has attained the age of 60 years. Retired personnel of defence Services (excluding Civilian Defense Employees) will be eligible to subscribe under the scheme irrespective of the age limit of 60 years. Further, an individual who is 55 years or above but below 60 years and has retired under a voluntary scheme or a special voluntary scheme, only the retirement benefits can be invested in the SCSS. [Rule 2(d)(ii)].
2. A depositor may extend the account for a further period of three years by making an application to the deposit office within a period of one year after maturity.

 

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