FD vs SCSS– If you want to save tax in the current financial year i.e. 2023-24, then you have to invest before 31st March. But the real problem is where to invest? This question is also justified because saving tax cannot be the only purpose of investment for everyone. Things like interest rate and lock-in period are also important for them.

This question becomes more complicated especially for senior citizens, because at this stage of age they generally avoid taking risks. They want to save tax as well as keep their investment safe. In such a situation, they turn to tax saving FD (Fixed deposit) or Senior Citizen Savings Scheme (SCSS).

Let us know which of these two schemes is better in terms of tax saving, returns and lock-in period.

What is the benefit of FD?

Elderly investors usually prefer fixed deposits. Firstly, the money is safe in it, secondly the returns are also fixed. Along with this, tax saving is also done. If you want to invest for one, two or three years, then FD will be best for you.

If you open an FD account for 1 year in the post office, you will get 6.9 percent interest per annum. If you invest for three years, the interest rate will be 6.9 percent. At the same time, the highest interest will be 7.7 percent per annum on 5-year FD.

In this, interest is paid on yearly basis, but calculation is done on quarterly basis. The minimum investment limit is Rs. 1000, there is no maximum limit. You can invest as much money as you have in FD.The amount invested in fixed deposit for 5 years gets the benefit of exemption under the Income Tax Act.

Why invest in SCSS?

Senior Citizen Savings Scheme (SCSS) is currently one of the few small savings schemes of the government, which offers a huge interest rate of 8.2 percent. In this, you are allowed to invest from Rs 1 thousand to Rs 30 lakh. You can also open more than one account, but the total investment amount cannot exceed Rs 30 lakh.

The investment in this matures after five years. It can also be extended for three years. If you have invested Rs 10 lakh in the scheme for 5 years, then you will get a total of Rs 14.28 lakh. It also provides tax exemption on investment of Rs 1.5 lakh under 80C.

Is FD better or SCSS?

The answer to this depends on your needs. If you want a short lock-in period, then you can opt for FD. But, if you want to invest for a longer period, then Senior Citizen Savings Scheme can be called a better option.

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