All you need to know about the Senior Citizen Savings Scheme
03 Jul 2019
Old age often brings uncertainty. Senior citizens face questions about their physical, emotional and financial health. The Government of India recognises the importance of financial security for the senior citizens and has started the Senior Citizen Savings Scheme (SCSS). Apart from providing financial security to senior citizens, it is one of the best tax saving options for senior citizens.
Who is eligible for the SCSS?
- An Indian resident aged 60 years or above.
- Indian resident above 55 years but below 60 years who have retired under the Voluntary Retirement Scheme rules or have appropriate superannuation. Under this, the SCSS account needs to be opened within a month of receipt of retirement benefits.
- Retired defence personnel (excluding defence civilians) meeting particular terms and conditions can also avail the scheme on attaining the age of 50 years.
Non-Resident Indians, Person of Indian Origin, and members of a Hindu Undivided Family are not eligible for the SCSS.
Where can one avail the SCSS?
An eligible individual can avail the scheme through a private or public sector bank or the Indian Post Office. Since SCSS is a Central Government scheme, the rules and regulations of the scheme are standard across these institutions.
What is the interest rate on the SCSS?
The interest rate on the SCSS changes every quarter. The amount is calculated and credited every quarter, too. For the last financial quarter of 2019-20 i.e. January- March 2020, the interest rate is 8.6%.
What is the minimum and maximum deposit limits?
Individuals availing the SCSS can make lump sum deposits into their account. The minimum deposit stands at Rs.1000 while the maximum amount is Rs. 15, 00, 000. Any deposit greater than Rs.1000 will have to be made in multiples of Rs.1000.
When will the scheme mature?
The deposited amount matures 5 years after the date of account opening. The account holder can extend the account once, by a period of 3 years. However, the application for maturity extension needs to be made within one year of account maturity.
What is the interest on senior citizen scheme taxability?
- There is SCSS tax exemption under Section 80C of the Income Tax Act, 1961. However, SCSS tax benefit is capped at Rs. 1, 50, 000.
- In case of interest amounting to more than Rs. 50, 000, for a fiscal year, TDS is applicable starting FY 20-21.
What are the different benefits of the SCSS?
- Being a government initiative, the depositor is protected by the facts associated with government schemes. This means, the depositor will not be affected by the economy.
- The Senior Citizen Saving Scheme tax benefit serves as a good way of saving money as the SCSS tax is deductible under the Section 80C of the Income Tax Act, 1961.
- In case of financial emergencies, the depositor can prematurely withdraw the amount with applicable penalties.
Now that you know how SCSS works, you can understand if it is the best financial option for you.
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Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
7 PPF Account Benefits You Should know About
If you are looking for a low-risk investment option, a Public Provident Fund or PPF is the answer for you. It is a long-term investment tool that helps you save money as well as enjoy tax benefits. The returns on a PPF investment are high, too, making it one of the most popular investment products of India. PPF account and its benefits are endless but here are seven top benefits you should know about:
Low risk: One of the biggest Public Provident Fund benefits is that it is a safe investment product. Since PPF account is not linked to any markets and is backed by the Government of India, an important PPF account benefit is that it has little to no risk. The returns on your investment are guaranteed by the government, so you can invest in a PPF and relax. An additional PPF account benefit is that if, unfortunately, you default on your debts, the funds in your PPF account cannot be attached by a court order to pay off the debt.
Tax benefits: Any investment up to Rs 1.5 lakh in a year into a PPF account is eligible for tax benefits under section 80C of the Income Tax Act. So your investments will be deducted from your taxable income. Another Public Provident Fund tax benefit is that the interest you earn on your investment is completely tax free.
Nomination benefits: A PPF account can be opened by anybody, including minors. Minors can invest in a PPF account under the guidance of a legal guardian. An important public provident fund benefit is that the account comes with a nomination option. So, you can nominate a beneficiary to your account in the unfortunate case of your death.
No minimum limit: With a PPF account, there is no minimum limit on deposits. You can start as low as Rs 500 and go on increasing the funds up to Rs 1.50 Lakhs.
Good returns: While you have the liberty to invest as low as you want, your returns are guaranteed by the Government of India. One of the PPF account benefits is you can also decide if you want to invest monthly or at once. For Quarter Jan-Mar 2020, the interest rate on a PPF account is 7.9% compounded annually.
Liquidity and loan facilities: A PPF account goes a long way at your time of need. One of the PPF account benefit is that you are eligible to get a loan from the Bank against a PPF account you hold with them from the 3rd F.Y. till end of 6th FY. In case of emergency, you can also make partial withdrawals from your PPF account on completion of five years from the end of the year in which the account was opened.
Flexible tenure: A PPF benefits after 15 years when the account tenure is over. Upon maturity you can decide to withdraw the entire amount or further invest in the PPF for an additional five years by applying for account extension within one year of maturity.
These are the top benefits of a PPF account. There are more advantages such as a PPF account can be transferred from your bank to a post office or other bank near you. You can also have your PPF account moved to a different Bank of Baroda branch. To invest in a safe and reliable investment tool, click here.
Benefits & Features of Term Deposit
Earning income from your investments doesn’t have to be a complicated exercise. It is possible to earn a decent interest income out of the amount lying in your bank account by opening a term deposit account. A term deposit is any amount kept with the bank for a fixed period of time. With a Bank of Baroda fixed term deposit, you can open a term deposit bank account for a period as short as 7 days and earn income.
Benefits of Term Deposit:
Easy and convenient:
Opening a bank term deposit is very convenient. It can be opened online through NetBanking, or via the mobile banking application. Forms for a term deposit are available online and in branches.
Competitive interest rates:
Bank of Baroda offers competitive interest rates on term deposit schemes. The interest rates differ based on the period of the fixed deposit.
Flexible periods:
Bank of Baroda offers different options for fixed term deposits. The periods can be as short as 7 days or go up to 10 years.
Loan/Overdraft facility available:
Bank of Baroda term deposit customers can avail a loan/overdraft facility against their time deposit. The loan amount is available up to 95% of the fixed deposit amount. The rate of interest on these loans is 1.5% to 1.75% over and above the fixed deposit rate.
Create investments:
Term deposits can be used to create investments in the name of children and senior citizens.
Nomination facility:
You can use the nomination facility to nominate different people for different fixed deposits. Nomination can be done online and in the form as well.
Premature withdrawal allowed:
Each term deposit opening form has an option, callable or non callable. If the callable option is selected, it allows you to withdraw your term deposit prematurely. The rate of interest paid will be 1% less than the time deposit rate of interest.
Features of Term Deposit Scheme:
Fixed Term Investments:
Each bank term deposit is kept for the fixed duration that is selected. This amount is blocked for that duration and unless the callable option is chosen, the amount cannot be withdrawn before maturity.
Earn Interest half yearly:
Interest is earned half yearly compounded quarterly on these deposits. It is credited to the fixed deposit account on maturity. Monthly or Quarterly payment of interest in linked SB account is also available in selective schemes.
Beneficial rate for senior citizens:
Senior citizens get a higher rate of interest on these deposits. Bank of Baroda gives 0.5% extra to senior citizens for their term deposits.
No TDS if interest amount is less than Rs. 10,000/-
The limit for deducting TDS is Rs. 10,000. If your income is below the no tax limit, you can fill Form 15G/15H with the bank and TDS won’t be deducted.
Auto renewal of fixed deposit:
Instructions can be given to the bank to auto renew the term deposit once it matures. The principal and interest amount will be renewed automatically on maturity.
Minimum deposit amount:
The minimum deposit amount is Rs. 1,000 and can be increased in multiples of Rs. 100.
Opening a fixed deposit with Bank of Baroda is really easy and simple. It can be done online within a matter of minutes and opening it in a branch is convenient as well.
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