New Delhi, June 14 (PTI): The government today clarified that the Senior Citizens Savings Scheme, which gives 9 per cent interest on investment up to Rs 15 lakh, is taxable and that tax would be deducted at source for those elderly people who come under the tax net.

Senior citizens beyond 65 years of age and having no taxable income can fill up form 15H, finance ministry sources said.

Those who are between 55-65 years of age would have to fill up form 15J in case they do not have taxable income, they said.

For all others, tax will be deducted at source on interest income, which is deposited in their savings accounts quarterly, the sources said.

The tax rate at 10 per cent is raised to 10.2 per cent due to education cess.

Those with income beyond Rs 10 lakh per annum will also pay 10 per cent surcharge, increasing their tax liability on interest income to 11.22 per cent.

The scheme was launched in August 2004 when bank deposit rates had hit a low of 5-6 per cent, making it one of most attractive options for senior citizens.

At that time finance minister P. Chidambaram had made it clear that the scheme was taxable.

Investors were allowed to invest a maximum of Rs 15 lakh and the tenure is five years, extendable by three years.

The scheme was open for those aged 60 and above and those who took voluntary retirement at the age of 55 and above.