Investment in small savings schemes such as SCSS or Senior Citizen Savings Scheme will fetch higher returns from October 1. The government has announced up to 0.4 per cent increase in interest rates applicable to small savings schemes such as SCSS for the quarter ending December 31, 2018, according to a statement by the Ministry of Finance. Money invested in a Senior Citizen Savings Scheme account will earn an interest rate of 8.7 per cent in the October-December period, instead of the existing 8.3 per cent, according to the official statement.
Here are five things you need to know about investment in Senior Citizen Savings Scheme:
1. Interest rate: For the three-month period from October 1 to December 31, the Senior Citizen Savings Scheme will fetch an interest rate of 8.7 per cent, according to the finance ministry. The government had, in July this year, kept the interest rates on small savings schemes such as SCSS unchanged for the July-September period.
Interest applicable to a Senior Citizen Savings Scheme account is paid on a quarterly basis. The interest is paid at the end of each calendar quarter, meaning June 30 for the April-June quarter, December 31 for the October-December quarter, and so on.
2. Maturity period: The Senior Citizen Savings Scheme comes with a maturity period of five years.
3. Where to open account? The Senior Citizen Savings Scheme is operated by the Department of Economic Affairs through post office - under India Post - and designated branches of commercial banks such as State Bank of India (SBI).
4. Minimum investment required: A Senior Citizen Savings Scheme account can be opened at a post office for a minimum of Rs 1,000, and in multiples of Rs 1,000, according to India Post's website - indiapost.gov.in.
5. Income tax benefit: Investment in Senior Citizen Savings Scheme qualifies for income tax deduction under Section 80C of the Income Tax Act. A TDS, or tax deducted at source, is applicable on an interest amount above Rs 50,000 per annum, according to Budget 2018-19. That means the Senior Citizen Savings Scheme offers a tax-free income up to Rs 50,000 in a financial year.