Senior Citizens Scheme: The government has not made any changes to the interest rates of small savings schemes. This means that investors will continue to receive the same returns as before. For senior citizens who want a fixed monthly income after retirement, the Post Office Senior Citizens Savings Scheme (SCSS) remains a reliable option.
This scheme allows you to deposit a lump sum amount and receive a regular income. Currently, this scheme offers an annual interest rate of 8.2 percent. The special feature is that the interest is deposited directly into the account every three months. If a person invests the maximum amount, they can receive up to ₹61,500 in interest every quarter, which is equivalent to an average monthly income of approximately ₹20,500.
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SCSS Investment Limit
A Post Office Senior Citizens Savings Scheme account can be opened with just ₹1,000. The maximum investment allowed in this scheme is ₹30 lakh. At the current interest rate of 8.2 percent, if a senior citizen invests ₹30 lakh, they will receive ₹2,46,000 in interest annually. Since the interest is paid quarterly, ₹61,500 will be credited to the account every three months.
Maturity and Extension Option
The maturity period of this scheme is 5 years. This means the investor has to keep the money deposited for at least five years. If needed, the account can be closed before the completion of 5 years, but in such a case, some penalty will be levied. After maturity, the account can be extended in blocks of 3 years. If you do not wish to extend it further, you can withdraw the entire deposited amount.
When and how will the Interest be received?
In this scheme, interest is credited every year on April 1st, July 1st, October 1st, and January 1st. The interest amount is transferred to the savings account linked to the same post office. If the account holder does not withdraw the interest amount, they do not receive any additional interest or compounding benefits.
Tax Relief Available
Investments made in the Senior Citizens Savings Scheme (SCSS) are eligible for tax exemption under Section 80C of the Income Tax Act. A deduction of up to ₹1.5 lakh can be claimed from the total income, thereby reducing the tax burden.
How Much Fund Will Be Received If Interest Is Not Withdrawn
If an investor deposits ₹30 lakh and does not withdraw the quarterly interest for 5 years, the total amount at maturity could be approximately ₹42 lakh. However, it is important to note that interest in SCSS is not compounded, and this figure is an estimate; the actual amount will be determined according to the rules.
Who Can Open an SCSS Account
Indian citizens aged 60 years or older can open an account under this scheme. Additionally, individuals between the ages of 55 and 60 who have taken voluntary retirement are also eligible to open an account. Those retiring from the defense services can invest in this scheme between the ages of 50 and 60, but they must open the account within one month of retirement.