Post Office Scheme : Everyone wants to save a portion of their earnings and invest it in a place where their money remains safe and also generates strong returns. This helps in building a substantial corpus and ensures financial stability after retirement. Many people also invest with the intention of securing a regular source of income during old age. From this perspective, Post Office Saving Schemes are highly popular.
The Post Office Senior Citizen Savings Scheme (SCSS) is specially designed for senior citizens. It offers a higher interest rate than many bank fixed deposits, making it an attractive investment option.
Post Office Scheme : Government Guarantee on Investment
One of the biggest advantages of Post Office saving schemes is that the Government of India provides a full security guarantee on the invested amount. Compared to the interest rates offered by major banks on fixed deposits, the Senior Citizen Savings Scheme offers a better return. Through this scheme, investors can secure a regular monthly income of up to ₹20,000. The minimum investment starts from just ₹1,000.
Attractive Interest Rate of 8.2%
Under the Post Office Senior Citizen Savings Scheme, the government has been offering an attractive interest rate of 8.2% per annum since 1 January 2024. This scheme is not only ideal for safe investment and regular income but also provides tax benefits. The maximum investment limit under this scheme is ₹30 lakh. It can play a crucial role in maintaining financial stability after retirement.
Any individual aged 60 years or above can open an account under this scheme. A joint account with a spouse is also allowed.
In certain cases, age relaxation is provided. For example, individuals who have taken Voluntary Retirement (VRS) can open an account if they are between 55 and 60 years of age. Similarly, defense personnel who have retired can invest if they are between 50 and 60 years, subject to specific conditions.
Penalty on Premature Account Closure
The maturity period of the Senior Citizen Savings Scheme is five years. To enjoy the full benefits, the investment must be maintained for this duration. If the account is closed before maturity, a penalty is charged as per the rules. The SCSS account can be easily opened at any nearby post office.
Under this scheme, investors are eligible for tax deduction of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act.
Monthly Income Calculation of ₹20,000
An investor can start with a minimum investment of ₹1,000, and the maximum investment allowed is ₹30 lakh, in multiples of ₹1,000.
If a person invests around ₹30 lakh at an interest rate of 8.2%, the annual interest earned will be approximately ₹2.46 lakh. This translates to a monthly income of nearly ₹20,000.
Interest under this scheme is paid quarterly, on the first day of April, July, October, and January. In the unfortunate event of the account holder’s death before maturity, the account is closed and the entire amount is transferred to the registered nominee.