Post Office Senior Citizen Savings Scheme Vs SBI Fixed Deposit: Returns Compared Here
Senior Citizen Savings Scheme (SCSS) offered by India Post or Department of Posts and State Bank of India (SBI) senior citizen fixed deposit (FD) accounts are some of the investment options available for senior citizens. Senior Citizen Savings Scheme (SCSS) can be opened by an individual of 60 years or above. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS (Voluntary Retirement Scheme) can also open SCSS account, according to India Post's official website- indiapost.gov.in. For opening a senior citizen fixed deposit account with SBI, an individual should be at least 60 years or more. (Also Read: Post Office Offers Senior Citizen Savings Scheme: 10 Things To Know)
Here is a comparison between Post office Senior Citizen Savings Scheme and SBI's senior citizen fixed deposit scheme:
Interest Rates
Senior Citizen Savings Scheme (SCSS) offers an interest rate of 8.7 per cent per annum, payable from the date of deposit of March 31/ September 30 / December 31 in the first instance and thereafter, interest shall be payable on March 31, June 30, September 30 and December 31, according to India Post's website.
While, the interest on SBI senior citizen fixed deposit rate for various tenors is 0.50 per cent higher than the interest rate offered to general public. For example- if an individual invests up to Rs 2 crore, interest rate of 6.25 per cent is offered for a period of seven days to 45 days and maximum interest to senior citizens of 7.35 per cent is offered on investment for a period of five years and up to 10 years.
Given below are the latest interest rates offered by SBI on FDs up to Rs 2 crore for senior citizens:
| Tenors | Existing for Public w.e.f. 28.11.2018 | Revised For Public w.e.f. 22.02.2019 | Existing for Senior Citizens w.e.f. 28.11.2018 | Revised for Senior Citizens w.e.f. 22.02.2019 |
|---|---|---|---|---|
| 7 days to 45 days | 5.75 | 5.75 | 6.25 | 6.25 |
| 46 days to 179 days | 6.25 | 6.25 | 6.75 | 6.75 |
| 180 days to 210 days | 6.35 | 6.35 | 6.85 | 6.85 |
| 211 days to less than 1 year | 6.40 | 6.40 | 6.90 | 6.90 |
| 1 year to less than 2 year | 6.80 | 6.80 | 7.30 | 7.30 |
| 2 years to less than 3 years | 6.80 | 6.80 | 7.30 | 7.30 |
| 3 years to less than 5 years | 6.80 | 6.80 | 7.30 | 7.30 |
| 5 years and up to 10 years | 6.85 | 6.85 | 7.35 | 7.35 |
Contributions and maturity period
A post office Senior Citizen Savings Scheme (SCSS) account has a maturity period of five years, which can be extended for another three years within one year of the maturity. Under the Post office Senior Citizen Savings Scheme minimum of Rs 1,000 and up to maximum of Rs 15 lakh in multiples of Rs 1,000 can be invested for a period of five years, according to India Post's website.
On the other hand, senior citizens can avail SBI fixed deposits from a minimum of seven days to 10 years, according to SBI's website- sbi.co.in.
Also Read: Interest Rate On Senior Citizen Savings Scheme (SCSS) Increased: 5 Things To Know
Tax benefits
Investments under the Senior Citizen Savings Scheme are exempt from Income Tax under the Section 80C of the Income Tax Act. However, a TDS is deducted at source on interest if the interest amount is more than Rs. 10,000 per annum.
While, the interest earned on State Bank of India fixed deposit is taxable under the income tax act.
Meanwhile, the government had proposed to raise the threshold of TDS on interest earned on bank and post office deposits from Rs 10,000 to Rs. 40,000. The proposed TDS hike will come into effect from April 1, 2019.