India's senior citizen scheme provides strong, assured returns

Question: My mother has now returned to India and is looking for investment of her savings in instruments which are safe and provide a reasonable monthly income. Can you suggest a risk free investment platform?

ANSWER: The Senior Citizens’ Savings Scheme has been in operation for the past few years. Over 5 million subscribers who are more than 60 years of age have subscribed to the scheme. Currently, the limit for investment in the scheme for senior citizens is Rs1.5 million, which is proposed to be doubled to Rs3 million. This scheme gives a fixed income of 8 per cent annually and, therefore, if a senior citizen deposits Rs3 million, she would earn annually Rs240,000. This amount of interest is well within the initial exemption limit, which will increase to Rs700,000 from the next financial year 2023-24 under the new income-tax regime. Therefore, for those who have other income, which together with the interest on the SCSS is within this limit, no tax would be payable. Even if a senior citizen has income from other sources that exceeds Rs3 million in a financial year, attracting the highest marginal rate of income-tax of 30 per cent, and such a person invests in the SCSS, the post-tax return on the SCSS deposit will be 5.6 per cent. This is therefore a highly recommended avenue for investment for senior citizens as it is safe and provides an attractive return on investment.

Question: I believe that the agricultural sector has not been given sufficient emphasis while announcing the proposals in the budget blueprint. Something needs to be done in a more focused manner. Your comments.

ANSWER: Several initiatives have been announced earlier this month by the government, which specifically deal with issues pertaining to the farm sector. Digital public infrastructure for agriculture will be established to enable farmer-centric solutions to be adopted. This will be done through information services for crop planning, improved access to inputs like high quality seeds, provision of credit to the extent of Rs20 trillion, and insurance of crops. Assistance will also be provided for crop estimation, market intelligence, and support for growth of agritech industry. An Agriculture Accelerator Fund is to be set up to encourage startups in rural areas in order to bring innovative and affordable solutions for challenges faced by farmers. This fund will encourage adoption of modern technologies to transform agricultural practices, increase productivity and profitability. For example, the productivity of extra-long staple cotton will be promoted on the basis of a cluster-based and value chain approach. With India being the largest producer of millets in the world, the Indian Institute of Millet Research will be supported as the Centre of Excellence for providing best practices and technologies at international level. The demand for millets is growing globally as it has a high nutritional value.

Question: My son and daughter-in-law would like to buy a property in India. Will they be able to obtain a home loan jointly? What are the legal and tax consequences of co-owning property?

ANSWER: The recent trend among persons in the 25 to 35 age group is to buy a residential property jointly, by each one contributing to the capital value of the asset. When an application is made for a home loan jointly, the combined income ensures that a larger loan amount is sanctioned. The financial burden for repaying the loan is shared between the joint owners as each owner will give a bank mandate for repayment of the loan and for the interest. Each of the home owners who have taken the loan would be eligible to claim a deduction of Rs150,000 per annum under section 80-C of the Income-tax Act in respect of the principal amount of loan repaid. Further, each one can claim a deduction for the interest paid upto Rs200,000 per annum. Therefore, joint ownership provides a tax efficient manner for owning property. Maintenance expenses payable to the co-operative housing society would also be shared by both parties, reducing the burden on each co-owner.

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