Saturday, May 4, 2019

Senior Citizen Savings Scheme

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Senior Citizen Savings Scheme is one of the few good investment schemes for senior citizens with a regular qyaterly payout. This scheme is available with India Post and can be applied at one of their offices.

Eligibility:
An individual of the age of 60 years or more may open the Senior Citizen Savings Scheme
Account. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.

Interest Rate:
Currently, Senior Citizen Savings Scheme offers an interest rate of 8.7 per cent. Interest is paid out every quarter.

Maturity Period:
Maturity period of Senior Citizen Savings Scheme is 5 years. Premature closure is allowed after one year on deduction of an amount equal to1.5% of the deposit and after 2 years 1% of the deposit. After maturity, the account can be extended for further three years within one year of the maturity by giving application in prescribed format. In such cases, account can be closed at any time after expiry of one year of extension without any deduction.

Maximum Limit:
A depositor may operate more than one account in individual capacity or jointly with spouse (husband/wife). There shall be only one deposit in the account in multiple of Rs.1000 maximum but not exceeding Rs. 15 lakhs. Account can be opened by cash for the amount below Rs. 1 lakh and for Rs. 1 Lakh and above by Cheque only. Any number of accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts. Joint account can be opened with spouse only and first depositor in Joint account is the investor.

Tax Implications:
Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act. TDS is deducted at source on interest if the interest amount is more than Rs. 10,000 per annum. 

This investment scheme is highly recommended for senior citizens. Banks are offering fairly low interest rates these days. This scheme is more secured and offers high interest rate with interest payout every quarter. As mentioned above, there is an option for early withdrawl with some fees. None of the banks are offering such a high interest rate and none of them are as safe as India Post savings scheme which is backed by government. Senior citizens should definitely invest the maximum amount of Rs 15 Lakhs in this scheme before investing in other schemes.

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