Decoding Senior Citizen Savings Scheme (SCSS)

As the name suggests, the investment vehicle is meant for the people over 60 years of age or more.

January 08, 2015 5:09 IST | India Infoline News Service
Among the various avenues available to senior citizens In India, Senior Citizen savings Scheme (SCSS) is one such deposit scheme that could augment the fund for them. As the name suggests, the investment vehicle is meant for the people over 60 years of age or more. However, those, who have taken voluntary retirement and are aged 55 years, could also invest in the scheme. Also, there is no age bar set for defense services personnel on their retirement. Here are some of the features explained.
Category of investors: Only individuals could open an SCSS account and NRIs, Persons of Indian Origin and a Hindu Undivided Family (HUF) could not apply for the same.
Source of Funds - The amount, to be invested for the people in between age 55-60 years, should mandatorily from retirement benefits, while the condition is not applicable for people above 60 years.
Maturity - The SCSS has tenure of five years, which can be extended for another three years.
Tax Benefit - Investment under the scheme enjoys tax exemption under Section 80 C, which is up to Rs. 1,50,000. However, interest earned under the scheme is not tax exempted.
Investment Limit - A person can invest a minimum of Rs, 1,000 to a maximum of Rs. 15 lakhs under the scheme.
Interest Rate - The interest earned under the scheme is 9.2%, which is fairly better than other investment avenues.
Other Features – Premature Withdrawal is available after one year of deposit but attracts penalty. A Loan could be drawn against the SCSS through pledging. An individual has an option to register a nominee at the time of the application and after opening the account as well.
Final Take – The investment option is safe and secure compared to other options. Since the tax exemption is only applicable up to Rs. 1, 50,000, therefore, one can choose to invest in parts spread across two-three years, in order to derive the maximum tax advantage.

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