Amid falling interest rates, here is one attractive investment options for those who are 60 or above the age of 60 — Senior Citizens Savings Scheme. From interest rates to tax benefits, here are the details
Coronavirus has taken a huge toll on economy, impacting our lives in more ways that one. The central banks across the world cut interest rates to save their economy from falling into recession. The returns from bank FDs go below 7 per cent-mark.
Senior citizens often depend on banks FDs for a regular income. Amid this falling interest rates, here is one attractive investment option for those who are 60 or above the age of 60 — Senior Citizens Savings Scheme. Touted as one of the simplest investment options, this unique scheme was launched in 2004. The scheme is available through several public and private sector banks and India Post offices. Amid record low interest rates, Senior Citizens Savings Scheme offers more than 7% interest rate per annum.
Eligibility: Any individual who is 60 or above the age of 60 can avail the benefits of Senior Citizens Savings Scheme. Those who have attained the age of 55 years or more but less than 60 years can also open their accounts under this scheme if they have opted for voluntary retirement. Defence personnel who are above the age 50 can also avail this benefit.
Account opening: One can open an account under this scheme with a minimum deposit of ₹1,000. The limit can go up to ₹15 lakh. The deposit in the account should be in the multiples of ₹1,000. Other than the individual accounts, banks also provide the option of opening accounts jointly with the spouse under the Senior Citizens Savings Scheme.
Interest rate: Among the various small savings scheme, Senior Citizens Savings Scheme offers the highest rate of interest. Currently, the interest rate is set at 7.4% for April to June quarter, 2020. Finance Ministry review the interest rate in every quarter. The interests are paid on a quarterly basis — the first working day of April, July, October and January.
Maturity: Accounts opened under Senior Citizens Savings Scheme has a tenure of five years. One can extend the account for another three years after it matures.
Premature closure: In case anyone closes the account after one year and before the completion of two years, 1.5% of the deposit shall be deducted as penalty. If the account is closed after two years, 1% penalty will be charged.
Tax-saving scheme: Investments of up to ₹1.5 lakh is eligible for deduction under section 80C of the Income Tax Act. However, interest earned from the scheme is fully taxable. In case, the interest earned is more than ₹40,000 in a financial year, tax deducted at source (TDS) is applicable to the interest earned.