Senior Citizen Saving Scheme (SCSS) vs Bajaj Finance Fixed Deposit
Features
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SCSS
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Bajaj Finance Fixed Deposit
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Interest rate
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8.2% (October-December 2024)
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Up to 8.85% p.a. (For Senior Citizens)
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Maturity period
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5 Year
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12-60 Months
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Tax benefits (On investment)
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Yes
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No
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Tax benefits (On returns)
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No
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No
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Benefits of SCSS
1. Guaranteed returns
SCSS is backed by a sovereign guarantee, making it a safe and risk-free investment avenue for seniors.
2. High interest rates
Seniors can earn more on their invested corpus with high SCSS interest rates. Currently, SCSS offers a high interest rate of 8.2% (Q1 2024-2025), which is higher than traditional safe investment options like bank fixed deposit and savings accounts.
3. Tax benefits
Apart from better earnings, SCSS also offers lucrative tax breaks. Seniors can claim a tax deduction of up to Rs. 1.5 Lakhs u/s 80(C) for their SCSS investment.
4. Quarterly interest payout
Periodic payouts help senior investors maintain a steady cash flow to meet their liquidity needs without withdrawing the entire corpus.
5. Unlimited extension
The latest SCSS rules allow multiple 3-year extensions after the 5-year tenure. In other words, seniors can continue enjoying the high SCSS interest rates and all other benefits for extended periods.
Features of SCSS
1. Guaranteed safety and returns
The Senior Citizen Savings Scheme (SCSS) is a government-backed program, offering investors complete security for their principal investment. Upon reaching maturity, you're guaranteed to receive the full amount you deposited along with accrued interest.
2. Regular interest payments
SCSS account holders earn interest on their initial deposit at a rate determined by the government. Effective from January 1st, 2024, interest is calculated from the date of deposit up to the next quarter end (March 31st, June 30th, September 30th, or December 31st). Thereafter, interest is compounded quarterly and credited to your account on the first day of April, July, October, and January.
3. Flexible deposit options
Deposits can be made in cash for amounts under Rs. 1 lakh. For larger deposits exceeding Rs. 1 lakh, payment should be made via cheque.
4. Extended tenure
The SCSS offers a standard maturity period of 5 years. However, you have the flexibility to extend it for an additional 3 years by submitting an application within the last year of the initial term.
5. Nomination facility
Account holders can nominate a beneficiary to receive the accumulated amount in case of their demise. Nominations can be made during account opening or at a later date.
6. Premature closure
While early account closure is permitted, it's subject to certain penalties:
- Closure before one year: The interest earned will be deducted from the principal amount.
- Closure after one year but before two years: A penalty of 1.5% of the principal amount will be applied.
- Closure after two years: A penalty of 1% of the principal amount will be applied.
Conclusion
The Senior Citizen Savings Scheme is ideal for individuals aged 60 years and above looking to park their surplus savings in a safe investment instrument and earn stable returns. If you are a retiree seeking a steady post-retirement cash flow, you can benefit from SCSS interest rates, which are higher than regular bank FDs and quarterly interest payments. This regular cash flow can create a dependable source of income to help cover your living expenses, medical bills, and other financial needs in the golden years.
Documents required to open an SCSS account
To open a Senior Citizen Savings Scheme (SCSS) account, you will need the following documents:
- Two passport-sized photographs
- Proof of identity (e.g., PAN card, Aadhaar card, Voter ID, passport)
- Proof of address (e.g., Aadhaar, landline bill)
- Proof of age (e.g., birth certificate, PAN card, Voter ID)
SCSS maturity period
The Senior Citizen Savings Scheme (SCSS) matures after 5 years from the date of account opening. However, account holders can extend the account in increments of three years after maturity. To extend, an application must be submitted for each three-year block.
The extension request should be made within one year of the SCSS account’s maturity date or within one year of the end of each subsequent three-year period. The extension will be counted from the date of maturity or the end of each block period, regardless of when the extension request is submitted.
Tax implications of the Senior Citizen Savings Scheme (SCSS)
Investments in SCSS are eligible for tax benefits as follows:
- The principal amount deposited qualifies for a tax deduction of up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act, 1961.
- Interest earned on SCSS is taxable based on the individual’s applicable tax slab. If the annual interest exceeds Rs. 50,000, Tax Deducted at Source (TDS) applies to the interest amount, with this TDS limit effective from Assessment Year 2020-21.
