Many elderly people currently are searching for secure investment ways to receive a decent return on them at the same time. Not only a regular income stream but also with tax-saving benefits are provided by the most preferred investment option for elderly people i.e. Senior Citizens Savings Scheme (SCSS). SCSS is a low-risk fixed return investment option, as opposed to mutual funds. Just like bank FDs, post office fixed deposits and PMVVY, the Senior Citizens Savings Scheme is an investment vehicle which comes with a tenure of 5 years and can be extended further by 3 years. Remember that, opposed to bank FDs, SCSS is a government-backed investment vehicle with assured returns and hence widely known as a stable investment option.
Currently, 7.4% per annum interest rate is provided by this scheme and the interest is payable on 31st March, 30th June, 30th Sept, and 31st December. A minimum deposit of Rs 1000 is required to open an SCSS account individually or jointly and the maximum deposit amount goes up to Rs 15 lakh. Remember that the amount deposited should not surpass the retirement money that has been earned. It is possible to deposit either of the lower Rs 15 lakh or the amount earned as a retirement benefit into the SCSS account. Interest received from the SCSS is credited to the linked savings account of the investor opened and maintained at the same post office. Apart from regional post offices, an SCSS account can be opened in both public and private sector banks and India Post Offices.
Deposits up to Rs 1.5 lakh a year in the senior citizen's savings scheme are tax-deductible but the interest rate is taxable for the investors. In particular, if the amount of interest is higher than Rs 50,000 per annum, TDS is withheld from the interest income. Under SCSS a premature withdrawal facility is also available but penalties are applicable. If the depositor exits from the scheme before the completion of 2 years from the date of account opening, a penalty of 1.5 per cent of the deposit amount is imposed. Similarly, if the depositor makes a premature withdrawal or exits from SCSS within 2 years or less than 5 years from the date of account opening, a penalty of 1 per cent of the deposit amount is charged.