Senior Citizen Savings Scheme (SCSS) has been specially designed for the elderly. In this scheme, senior citizens are being given an interest of 8.2%. If you want to invest your retirement capital in a safe investment scheme, then through this scheme you can earn a guaranteed interest of ₹ 12.3 lakh in 5 years.
After retirement, when there is no regular source of income, then the lifelong savings are the biggest support. Every elderly person wants that his hard-earned money remains safe and he gets enough return on it so that old age can be spent comfortably. If you are also looking for such an investment option with safe and guaranteed returns, then a scheme of the post office can prove to be a ‘superhit’ for you.
The name of this scheme is Senior Citizen Savings Scheme (SCSS). It is specially designed for the elderly, in which not only more interest is given than bank FD, but your money is also 100% safe. See how senior citizens can earn a huge amount of ₹12,30,000 from this scheme in 5 years just from interest.
What is Senior Citizen Savings Scheme (SCSS)?
SCSS is a small savings scheme backed by the Government of India, specially designed for citizens above 60 years of age. This is a deposit scheme, in which you deposit a lump sum amount for 5 years and the government gives you guaranteed interest on it every three months.
- Interest rate: Currently, it is getting a great interest of 8.2% per annum.
- Minimum investment: You can start with just ₹1,000.
- Maximum investment: Up to ₹30,00,000 can be invested.
How to get bumper interest of ₹12.30 lakh? Understand the calculation
The biggest attraction of this scheme is its high-interest return. Let us understand this with a simple calculation.
If a senior citizen invests the maximum limit i.e. ₹30,00,000 in this scheme, then-
- Interest rate: 8.2% per annum
- Annual interest: 8.2% of ₹30,00,000 = ₹2,46,000
- Quarterly interest: ₹2,46,000 / 4 = ₹61,500 (This amount will come to your account every 3 months)
- Total interest in 5 years: ₹2,46,000 x 5 = ₹12,30,000
In this way, on maturity after 5 years, you will get back ₹42,30,000 by combining your investment (₹30 lakh) and total interest (₹12.30 lakh).
Understand how much return on how much investment
| Investment amount | Quarterly Interest | Total Interest in 5 Yrs | Maturity Amount |
| ₹5,00,000 | ₹10,250 | ₹2,05,000 | ₹7,05,000 |
| ₹10,00,000 | ₹20,500 | ₹4,10,000 | ₹14,10,000 |
| ₹15,00,000 | ₹30,750 | ₹6,15,000 | ₹21,15,000 |
| ₹30,00,000 | ₹61,500 | ₹12,30,000 | ₹42,30,000 |
Who can invest in this scheme?
Any person who is 60 years of age or above can invest in it. On the other hand, civil sector government employees taking VRS and those retiring from defense are given relaxation in age limit with some conditions.
Tax exemption and other important rules
Investing in SCSS provides tax exemption of up to ₹1.5 lakh under Section 80C of the Income Tax Act. Keep in mind that the interest earned from this scheme is taxable. TDS is deducted if the interest amount in a financial year exceeds ₹1,00,000. It can be extended within 1 year of maturity. The extended account receives interest at the rate applicable on the date of maturity.
FAQs
1. Is the interest earned on SCSS tax-free?
No, under section 80C, tax exemption is available only on the principal amount invested. The interest earned from this is added to your income and is taxable as per your tax slab.
2. Can both husband and wife together open separate accounts of ₹30 lakh each?
Yes, if both are above 60 years of age, they can invest ₹30 lakh each (total ₹60 lakh) in their respective names.
3. Is the interest rate of this scheme fixed for 5 years?
Yes, the interest rate applicable at the time you open the account is locked in for the entire period of 5 years, even if the government changes the interest rates subsequently.
4. Why is this scheme better than bank FD?
Usually the interest rate of SCSS is higher than that of Senior Citizen FD. Also, it is backed by the government, so there is no risk of money sinking in it.
5. What if I need money before 5 years?
If the account is closed before one year, no interest is paid on it. If any interest is paid on the account, it is recovered from the principal. A penalty of 1.5% of the deposit amount is charged if the account is closed between 1 year and 2 years and 1% if the account is closed between 2 and 5 years.
