This scheme of the government is becoming a boon for the elderly, will provide income even after retirement, know the details
SCSS: During employment, salary keeps coming every month, but after retirement, the source of income becomes limited. Keeping this need in mind, the Government of India had started the Senior Citizen Saving Scheme. This scheme is specially designed for citizens aged 60 years and above, so that they can get regular income with safe investments.
What is Senior Citizen Saving Scheme?
Senior Citizen Savings Scheme is a government savings scheme aimed at providing stable and predictable income to retired people. In this scheme, a lump sum amount is deposited and the interest on it is deposited in the account every three months as per the fixed interest rate. This quarterly payment gives the experience of regular income like pension.
Who can take advantage of the scheme?
Persons aged 60 years or above can invest in this scheme. Under certain circumstances, people between 55 and 60 years of age who have taken voluntary retirement may also be eligible. The account can be opened individually or jointly with the spouse, but in a joint account the primary holder must be a senior citizen.
Limit and method of investment
The minimum investment in this scheme starts from Rs 1000 and the maximum limit is Rs 30 lakh. The amount is deposited in multiples of Rs 1000. Investment must be made in lump sum; installments are not accepted. If husband and wife open separate accounts, then both of them together can invest up to Rs 60 lakh. Cash deposit facility is available up to Rs 1 lakh, while for amounts above this, check or banking mode is required.
Interest rates and potential income
The interest rate for the first quarter of the financial year 2025-26 has been fixed at 8.2 percent per annum. Interest is paid every three months. For example, if a person invests Rs 30 lakh, he can get approximately Rs 2.46 lakh annually as interest. This amount is received on quarterly basis, which generates an average income of around Rs 20,500 per month. This regular cash flow helps in balancing expenses after retirement.
Term and extension facility
The basic duration of the scheme is 5 years. After maturity it can be extended for another three years. Application for extension has to be made within one year from the date of maturity. The interest rate decided at the time of investment remains constant for the entire period.
Tax benefits and tax liability
Under Section 80C of the Income Tax Act, a rebate of up to Rs 1.5 lakh is available on investment in this scheme. However, the interest earned is fully taxable. TDS can be deducted if the interest exceeds Rs 50,000 in a financial year. If needed, relief can be availed by submitting Form 15H or 15G. Therefore, it is important to pay attention to tax planning before investing.
Premature Withdrawal Rules
If necessary, the account can be closed before maturity, but penal provisions are applicable for this. In case of closure before one year, the interest earned can be withdrawn. For closure between one and two years, there is a deduction of 1.5 per cent of the deposit amount and after two years, there is a deduction of 1 per cent. Therefore, it is important to assess the period correctly while investing.
Account opening process
This account can be opened in authorized banks and post offices. Documents like Aadhar card, PAN card and age certificate are required. The account can be opened by filling the prescribed form and depositing a lump sum amount. The account can also be transferred from one branch to another across the country.
For whom is this scheme better?
This scheme is especially useful for retired people who have lump sum amount available from PF, gratuity or other source and who want regular income with low risk. Secure returns and fixed interest rates make it attractive for investors.
Precautions while investing
It is not advisable to invest your entire retirement savings in just one plan. Ignoring tax liability can also be wrong. Also, it is wise to maintain a separate fund for emergency needs. With a balanced portfolio and the right financial advice, this plan can make retirement life more secure.
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