Under the Senior Citizen Saving Scheme, one can earn Rs 20 thousand every month.Image Credit source: ChatGPT
After retirement, senior citizens in India often have little or no income left, and if they do not invest wisely, all their savings are soon exhausted. This is why the Government of India has started the Senior Citizens Saving Scheme (SCSS). This small savings scheme enables senior citizens to invest their hard-earned money and earn interest over time.
SCSS also offers tax benefits in some cases, although it is not completely tax free. SCSS has attracted retired investors due to its attractive interest rates, quarterly payments and security. Everything you need to know about SCSS and how you can earn more than Rs 20,000 every month, let us tell you in detail…
What is SCSS?
SCSS is a small savings scheme of the government designed for senior citizens to stabilize their financial position after retirement. SCSS provides a secure investment option to Indians above 60 years of age. Retired people who have opted for Superannuation, Voluntary Retirement Scheme (VRS), or Special VRS and are aged between 55 to 60 years can also avail the benefits of SCSS.
Under certain special conditions, retired officers from Defense Services can also open SCSS account after attaining the age of 50 years. If you are opting for SCSS, you can open the account in your name alone or jointly with your spouse. The maturity period of SCSS account is five years and you can withdraw the amount after the account expires. Alternatively, you can apply for a three-year extension.
How much can one invest in SCSS?
The minimum amount of investment in SCSS is Rs 1,000 and thereafter investment can be made in multiples of Rs 1,000. Maximum investment is Rs 30 lakh. This high investment amount allows recently retired people to invest their retirement funds in a safe and stable government scheme.
What is the current interest rate of SCSS?
The current interest rate of Senior Citizen Saving Scheme is 8.2 percent. Interest rates are revised from time to time depending on the condition of the economy and the inflation rate at that time. As per the SCSS website, interest will be payable on the 1st working day of April/July/October/January from the date of deposit up to 31st March/30th June/30th September/31st December, and thereafter, interest will be payable on the 1st working day of April/July/October/January.
How to earn Rs 20,000 every month from SCSS?
It is possible to earn more than Rs 20,000 every month through SCSS. Let us try to understand this with an example. Suppose you have a good amount of money after retirement and you open a SCSS account in a bank or post office and invest Rs 30 lakh.
Calculation of interest: The current SCSS interest rate is 8.2 percent per annum, on which compound interest is charged quarterly. According to this, you will get interest of approximately Rs 2.46 lakh annually. If this amount is divided equally in 12 months, it becomes Rs 20,500.
What tax benefits are available from SCSS?
The amount deposited in SCSS is eligible for tax deduction under Section 80-C of the Income Tax Act, 1961. This also makes SCSS a tax saving form of interest. Under this, you can claim tax deduction up to Rs 1.5 lakh from SCSS.
However, it is important to note that only the principal amount is eligible for this tax benefit and you will have to pay income tax on the interest earned as per your income. If your income is below the basic exemption limit, the interest can be considered tax free.
Also keep in mind that if the interest is more than Rs 1 lakh per year, then 10 percent TDS is deducted on it. However, if your total income does not exceed the basic exemption limit, you can fill Form 15H to avoid TDS.
