Senior Citizen Savings Scheme: After retirement, the biggest concern is ensuring a regular income and the security of savings. In this situation, the Senior Citizen Savings Scheme (SCSS) run by the government emerges as a reliable investment option for senior citizens. This scheme is specifically designed for people aged 60 years and above, to provide them with stable returns and regular income without risk.
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What is the Senior Citizen Savings Scheme?
The Senior Citizen Savings Scheme is a small savings scheme of the Government of India, operated through post offices and select banks. It offers a fixed interest rate on investments, and since it is fully government-backed, the invested amount remains secure. Any Indian citizen aged 60 years or older can open an account under this scheme. In some special circumstances, people who have retired between the ages of 55 and 60 can also benefit from it.
SCSS Interest Rate and Payment System
The SCSS currently offers an annual interest rate of 8.2 percent, which is considered better than many other safe investment options. The biggest advantage of this scheme is that the interest amount is paid to the investor every three months, i.e., quarterly. This provides senior citizens with a stable source of regular income, making it easier to meet their daily expenses.
Investment Limit and Maturity Period
The minimum investment amount to open an account under this scheme is ₹1000. The maximum investment limit is set at ₹30 lakhs. The maturity period of SCSS is 5 years. After five years, the investor receives their principal amount back. If needed, the account can be extended after maturity.
Important Tax Information
Investments made in the Senior Citizen Savings Scheme are eligible for tax exemption under Section 80C of the Income Tax Act. However, the interest earned from this scheme is fully taxable. If the annual interest income exceeds the prescribed limit, TDS (Tax Deducted at Source) may be deducted. Therefore, it is essential to consider tax planning before investing.
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How much return will you get on investing ₹5 lakh?
If a senior citizen invests ₹5 lakh in the Senior Citizen Savings Scheme (SCSS), they will receive approximately ₹10,250 as interest every quarter. This provides a substantial and regular income throughout the year. Over five years, a total of approximately ₹2.05 lakh has been received as interest. At maturity, the investor also receives their principal amount of ₹5 lakh back, making this scheme both safe and profitable.