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It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
Investing in SCSS is a good opportunity for senior citizens above 60 years to make money. This is an effective and long-term saving option which offers security and added features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India.
The following people/groups are eligible to opt for SCSS:
An individual can invest a maximum amount of Rs.15 lakh, individually or jointly in an SCSS account (in multiples of Rs.1,000). The amount invested in the scheme cannot exceed the money that has been received on retirement. Hence, the individual can invest either Rs.15 lakh or the amount received as a retirement benefit, whichever is lower. The account can be opened by cash for an amount below Rs.1 lakh and by cheque for an amount exceeding Rs.1 lakh.
1. Safe and Reliable: This is an Indian government-sponsored investment scheme and hence is considered to be one the safest and most reliable investment options. 2.Simple and easy process: The process to open an SCSS account is simple and can be opened at any authorized bank or any post office in India. It is also transferable across India. 3.Good returns: At 7.4% p.a. the return rate is very good as compared to a savings or FD account. 4. Nomination: Nomination facility is available at the time of opening an SCSS account by means of submitting an application as part of Form C. This submission is also accompanied by the passbook to the Branch. 5. Tax benefits: Tax deduction of up to Rs.1.5 lakh can be claimed under Section 80C of the Indian Tax Act, 1961. 6. Flexible: The tenure of this investment scheme is flexible with an average tenure of 5 years which can be extended up to 3 additional years.
An SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:
All the above documents must be self-attested.
Below are the interest rates offered historically on the Senior Citizens’ Savings Scheme:
|Up to 2012||9%|
The tenure of this scheme is 5 years with the option to extend it for 3 more years. In order to extend the scheme for another 3 years after the completion of the 5-year tenure, the investor is required to submit the duly filled Form B for the extension of the scheme. Only one extension is allowed, and such extended accounts can be closed after one year of extension without any penalty. Premature withdrawals are allowed but only after a year of opening an account. If the closure of the account takes place after one year but before the end of 2 years, 1.5% of the deposit is deducted in the form of pre-mature withdrawal charges. Upon closure of the account after 2 years an amount equal to 1% of the deposit shall be deducted as charges. In the event of the death of the depositor, no charges or penalty is levied for the premature closure of the account.
Following are the banks where an SCSS account can be opened:
To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At 7.4% p.a. interest rate and an investment amount of Rs.15 lakh, the monthly income is stated to be Rs.9,250 per month for each investor.