Good news for senior citizens! The government has officially exempted withdrawals from the National Savings Scheme (NSS) from tax deduction at source (TDS). This step ensures that seniors can access their savings without facing unexpected tax cuts.
The National Savings Scheme (NSS) is a government-supported savings plan aimed at encouraging long-term savings among senior citizens. It offers safe investments with assured returns, helping retired individuals manage their finances securely.
Until now, any money withdrawn from an NSS account was considered taxable income under “income from other sources.” Additionally, TDS was deducted on these withdrawals—something not applicable to other savings options like PPF. This meant senior citizens were often unable to access their full savings.
In Budget 2025, the government announced that no TDS would be deducted on NSS withdrawals made on or after August 29, 2024. This change mainly benefits those with old NSS accounts that are no longer earning interest.
A fresh notification from the Central Board of Direct Taxes (CBDT) dated April 4, 2025, confirmed that no TDS will be applied to NSS withdrawals from that date onwards. This clears up confusion and ensures smoother access to funds for retirees.
This tax relief is aimed at senior and super-senior citizens with old NSS accounts. Many of these accounts no longer earn interest, and now, withdrawals from such accounts won’t face extra tax deductions.
Apart from NSS withdrawal exemption, Budget 2025 also raised the tax deduction limit on interest income for seniors from ₹50,000 to ₹1 lakh. This means more tax savings on bank, post office, or other interest earnings.
The Senior Citizen Savings Scheme (SCSS), part of NSS, offers attractive interest rates and quarterly payouts. It’s a great source of regular income for retired individuals looking for safe investments.
NSS stands out because:
The TDS exemption on NSS withdrawals is a big relief for senior citizens. It reduces their tax burden and allows full access to their own savings. Along with higher tax deduction limits, this move supports financial independence and stability in retirement.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Apr 19, 2025, 8:55 AM IST
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