Savings scheme

Is the Old People’s Savings Scheme (SCSS) one of the best investments for older people?

Interest rate and deposit amount

The government offers it through the post office or nationalized banks. The 7.4% interest rate paid on it is one of the highest rates offered by the government. Initially, 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 the 31st of December. The interest amount can be withdrawn by automatic credit from a savings account located in the same post office, or ECS. In the case of an SCSS account at CBS post offices, the monthly interest can be credited to a savings account opened at any CBS post office.

The government informs that only one deposit to the account can be chosen here, in multiples of Rs. 1000. The maximum deposit amount is Rs. 15,000,000.

Age Interest rate Maximum deposit amount
Over 60 7.40% Rs.15,000,000
Eligibility for the Seniors Savings Scheme (SCSS)

Eligibility for the Seniors Savings Scheme (SCSS)

As this is a scheme for seniors, the age of the investor must be over 60 years old. However, in some cases the age will vary, such as retired civilian employees over 55 and under 60, provided the investment is made within one month of receipt of the pension benefit cap applicable to the regime. In addition, retired defense employees over the age of 50 and under the age of 60 can also invest in the said scheme. The account can be opened individually or jointly with the spouse.

If you are not a senior but still interested in the device due to its assured returns, you can open an account at a post office in the name of your father or mother. He or she must be a senior to receive account benefits. At a time when stock markets are quite volatile and fixed deposit (FD) interest rates are not very profitable compared to this scheme, the SCSS is a lucrative scheme to invest in.

Maturity of the Seniors Savings Plan (SCSS)

Maturity of the Seniors Savings Plan (SCSS)

As the maturity period is 5 years, you can close the account after 5 years. After that, you can again request the renewal of another account under the same regime. The investor can extend the account for a further period of 3 years from the due date by submitting the prescribed form with a passbook to the relevant post office. The account can also be extended within one year of expiry. An extended account will earn interest at the rate applicable on the due date.

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

Early closing deduction

Early closing deduction

As an investor, you can also close the account under the early 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 expiration of one year from the date of extension of the account without any deduction.

Taxation

Investment under this scheme is eligible for the benefit of Section 80C of the Income Tax Act 1961. However, the amount of interest will be taxable if the total interest in all SCSS accounts exceeds Rs. 50,000 in a financial year, and the TDS at the prescribed rate will be deducted from the total interest paid.


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