look news india
After retirement, the biggest concern of every elderly citizen is that their entire life savings should be completely safe and it should also generate a fixed income every month or every quarter. Amidst the ups and downs of the stock market and changing interest rates of banks, senior citizens prefer such schemes where there is 100% guarantee of government security. Senior Citizen Savings Scheme (SCSS) run by the Government of India has currently emerged as one of the most reliable and highest return saving schemes for the elderly. The government pays interest directly into the bank account every three months on the investments made in this scheme, which is operated through post offices and authorized government and private banks, which creates a system of regular income like a pension.
The quarterly income of ₹ 61,500 received in this scheme is based on the maximum investment limit increased by the government and an attractive annual interest rate of 8.2 percent. The Central Government has increased the maximum deposit limit for single or joint account in this scheme from ₹15 lakh to ₹30 lakh.
When a senior citizen makes a lump sum investment of the maximum limit i.e. ₹ 30 lakh in this scheme, the total interest for 1 year comes to ₹ 2,46,000 at an annual rate of 8.2 percent. As per SCSS rules, interest is paid not annually but every quarter. When the total interest income of ₹2,46,000 in a year is divided equally into four quarters, the account holder gets a guaranteed amount of exactly ₹61,500 directly into their savings account every 3 months. If we look at it on a monthly basis, this amount comes to approximately ₹ 20,500 every month.
The tenure of Senior Citizen Savings Scheme is 5 years. If an investor continues this scheme for 5 years, he gets an interest of ₹ 2,46,000 every year. Thus, the total income received only through interest during the entire tenure of 5 years becomes ₹ 12,30,000. The most important thing is that after completion of 5 years maturity, the investor’s principal amount i.e. ₹ 30 lakh remains completely safe and the entire money is returned to the investor. If the account holder wishes, after completion of 5 years, he can extend this account further in a block of 3 years, so that this regular income can be continued continuously further.
Mainly any Indian citizen of 60 years of age or above is eligible to open an account in this scheme. However, the government has also given special exemption for retired employees. Individuals above 55 years of age and below 60 years of age, who have taken voluntary retirement i.e. VRS or superannuation, can also invest in it within a month of receiving the retirement benefits. Apart from this, military personnel retiring from Defense Services are considered eligible to open this account only after the age of 50 years. This account can be opened in single name or as a joint account only with your spouse.
Investing in SCSS offers tax exemption of up to ₹ 1.5 lakh per year under Section 80C of the Income Tax Act. However, the interest received from this scheme is fully taxable. Under the Income Tax Act, for senior citizens, earnings up to ₹50,000 from all interest sources are tax-free under Section 80TTB. Since the annual interest on an investment of ₹30 lakh is ₹2.46 lakh, the bank or post office makes the payment after deducting 10 percent TDS as per rules. If the total income of the investor is within the tax exemption limit, he can avoid deduction of TDS by submitting Form 15H. In case of need of money in emergency, the account can be closed after 1 year, in which a nominal deduction of 1.5 percent of the deposited amount is made and if closed after 2 years, 1 percent is deducted.