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Is Senior Citizen Savings Scheme (SCSS) One Of The Highest Beneficial Investment For Senior Citizens?

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The Senior Citizen Savings Scheme (SCSS) is one of the highest beneficial investment tools for senior citizens, which is an assured investment option offered by the union government of India. The maturity period of the scheme is 5 years. Here, eligibility, interest rate, and other benefits have been discussed for investment.

 

Interest rate and deposit amount

Interest rate and deposit amount

The government offers it through the post office or nationalized banks. The interest rate of 7.4% paid on it is one of the highest rates offered by the government. In the first instance, the interest rate will be paid on March 31, or September 31, or December 31, and after that, the interest will be paid on March 31, or June 30, or September 30, or December 31. The interest amount can be drawn through auto credit into a savings account standing at the same post office, or ECS. In the case of an SCSS account at CBS Post offices, monthly interest can be credited into a savings account standing at any CBS Post Offices.

The government informs that only one deposit in the account can be opted here, in multiple of Rs. 1000. The maximum deposit amount is Rs. 15 lakh.

AgeInterest rateMaximum deposit amount
Above 60 years7.40%Rs. 15 lakh
Eligibility of the Senior Citizen Savings Scheme (SCSS)
 

Eligibility of the Senior Citizen Savings Scheme (SCSS)

As it is a senior citizen scheme, the age of the investor should be above 60 years. However, in some cases, the age will vary, like retired civilian employees above 55 years of age and below 60 years of age, subject to the condition that investment is made within 1 month of receipt of the retirement benefits cap apply for the scheme. Additionally, retired defense employees above 50 years of age and below 60 years of age can also invest in the said scheme. The account can be opened in an individual capacity or jointly with the spouse.

If you are not a senior but still interested in the scheme due to its assured returns, you can open an account in a post office under the name of your father or mother. He or she must be a senior citizen to avail the benefits of the account. At a time, when the equity markets are quite volatile and interest rates on the Fixed Deposits (FDs) are not very profitable compared to this scheme, the SCSS is a lucrative scheme to invest in.

Maturity of the Senior Citizen Savings Scheme (SCSS)

Maturity of the Senior Citizen Savings Scheme (SCSS)

As the maturity period is 5 years, you can close the account after 5 years are completed. After that, you can again apply to renew another account under the same scheme. The investor can extend the account for a further period of 3 years from the date of maturity by submitting the prescribed form with a passbook at the concerned post office. The account can also be extended within 1 year of maturity. An extended account will receive interest at the rate applicable on the date of maturity.

If the investor dies during this period, from the date of death the account will receive interest at the rate of the Post Office Savings Account. On the other hand, if the spouse is a joint account holder or a sole nominee, the account can be continued till maturity, if the spouse is eligible to open an SCSS account and does not have another SCSS Account.

Deduction On Premature Closure

Deduction On Premature Closure

As an investor you can also close the account under the Premature Closure option, however, if you close the account before 1 year, no interest will be paid by the government. If you close the account after 1 year but before 2 years from the date of opening, an amount equal to 1.5 % will be deducted from the principal amount. If you close the account after 2 years but before 5 years from the date of opening, an amount equal to 1 % will be deducted from the principal amount. On the other hand, the extended account can be closed after the expiry of 1 year from the date of extension of the account without any deduction.

Taxation

The investment under this scheme qualifies for the benefit of section 80C of the Income Tax Act, 1961. However, the interest amount will be taxable if total interest in all SCSS accounts exceeds Rs. 50,000 in a fiscal, and TDS at the prescribed rate shall be deducted from the total interest paid.

Story first published: Tuesday, June 21, 2022, 7:46 [IST]
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