Latest news with #SeniorCitizenSavingsScheme
Mint
3 days ago
- Business
- Mint
RBI MPC meeting: 5 things that senior citizens should do THIS month for higher returns
RBI MPC meeting: The RBI Governor, Sanjay Malhotra, declared the higher-than-expected repo rate cut after three days of the RBI MPC meeting. This move will hit bank fixed deposit (FD) interest rates across tenors. As bank FD is a traditional investment option for senior citizens, this RBI repo rate cut is expected to hit the return on bank FD. According to tax and investment experts, it would take time for the Indian banks to pass on the repo rate cut benefit to loan applicants. They advised senior citizens planning to open a bank FD account to open it immediately and avail of the higher returns on their bank FDs. They also suggested senior citizens go for time deposits in post office small savings schemes or senior citizens saving schemes, where they can get higher than bank FD returns in the medium to long term. They also advised them to go for PSU bonds and debt mutual funds. On how the RBI MPC meeting outcome would impact bank FD returns of senior citizens, Pankaj Mathpal of Optima Money Managers said, "The repo rate cut is going to affect FD rates negatively as banks would cut FD rates across tenors once they pass on this repo rate cut decision to their customers. So, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn't impact old bank FD accounts. If they fail to take this opportunity, they can look at time deposits in the post office small savings schemes." On the top five options that senior citizens should do immediately or by the end of June 2025, Pankaj Mathpal said, 'Senior Citizens planning to open a bank FD account in the near-term are advised to book a bank FD account before the bank passes on this rate cut benefit to their customers. If they fail to do this, they should look at time deposit schemes of post-office, senior citizens saving scheme, PSU bonds, and debt mutual funds.' 1] Book bank FD account immediately: "As it would take time for the Indian banks to pass on the rate cut benefit to its customers, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn't impact old bank FD accounts," said Pankaj Mathpal. 2] Time deposit in the post office: "Time deposit comes under the government of India backed-small savings scheme, and its interest rate doesn't change with the change in bank FDs. It changes every quarter quarterly, and hence, any post office time deposit change can be expected in the July to September 2025 review. So, suppose a senior citizen opens a time deposit account in the post office, which has the same investment model available in banks' FDs. In that case, they can expect a higher yield on one's money than bank fixed deposits," said SEBI registered Jitendra Solanki. 3] Senior Citizen Savings Scheme: "This is also an option that a senior citizen can look at in June as the government may also consider decreasing the low savings schemes' interest rate in the next quarter amid the lowering interest rate regime. Suppose a senior citizen opens a senior citizen's savings account in June. In that case, it will continue to yield a higher yield on one's money even if the central government decides to decrease the interest rate of a senior citizens savings scheme," said Jitendra Solanki. 4] PSU bonds: "Amid lowering interest rates, banks are expected to witness lower deposits in upcoming quarters. In that scenario, banks will have to look at other options to generate funds to meet the rising demand for lending. So, bank bonds are expected to flood. Hence, senior citizens are advised to look at PSU bonds as they are safer than corporate bonds. A corporate bond yields around 8 per cent in the medium term, while a PSU bond yields around 6.50 per cent to 7 per cent, which is still higher than bank FD interest rates," said Jitendra Solanki. 5] Debt mutual funds: "Debt funds are also considered a safe bet, which senior citizens can look at. It also yields around 7.50 per cent to 8 per cent in the medium to long term. So, senior citizens looking for bank FDs for the long term are advised to look at PSU bonds in the wake of RBI's repo rate cut and its impact on bank FD interest rates," said Jitendra Solanki. Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
Time of India
14-05-2025
- Business
- Time of India
SCSS vs Senior Citizen Bank FDs: Which offers the highest interest rate?
Senior citizens should choose suitable investment options while planning their retirement funds to ensure a steady income and the safety of their capital. The government-backed Senior Citizen Savings Scheme (SCSS) and bank-offered Senior Citizen Fixed Deposits (FDs) are two popular choices for senior citizens in India. Both offer security and favourable interest rates; however, their benefits, flexibility, and returns vary. Here is a quick comparison of interest rates, tax benefits, and deposit limits for SCSS and bank fixed deposits for senior citizens. Interest rate comparison of SCSS and Senior Citizen FDs: Senior Citizen FD Rates in 2025 Suryoday Small Finance Bank offers the highest interest rate of 9.10% on a 5-year FD, followed by Unity Small Finance Bank at 8.65% and NorthEast Small Finance Bank at 8.50%—much higher than the SCSS offered rate of 8.2%. YES Bank and SBM Bank India offer an interest rate of 8.25%, while state-owned State Bank of India offers 7.50%, and Bank of Baroda provides a 7.40% interest rate on a 5-year FD. FD interest rate up to 9.10%: This bank hikes fixed deposit interest rates by 41 bps; Check details here Senior Citizen FD Table Senior Citizen FD Table Bank Name Additional rates offered to Super Senior Citizen* (over and above to senior citizen rates) 5-year tenure (%) SMALL FINANCE BANKS AU Small Finance Bank 7.75 --- Equitas Small Finance Bank 7.75 --- ESAF Small Finance Bank 6.50 --- Jana Small Finance Bank 8.20 --- NorthEast Small Finance Bank 8.50 --- Suryoday Small Finance Bank 9.10 --- Ujjivan Small Finance Bank 7.70 --- Unity Small Finance Bank 8.65 --- Utkarsh Small Finance Bank 8.25 --- PRIVATE SECTOR BANKS Axis Bank 7.65 --- Bandhan Bank 6.60 --- City Union Bank 6.50 0.10% on 365 days; 0.05% on 366 days to 3 years tenure CSB Bank 6.25 --- DBS Bank 7.00 --- DCB Bank 7.75 --- Federal Bank 7.40 --- HDFC Bank 7.25 --- ICICI Bank 7.40 --- IDFC FIRST Bank 6.50 --- IndusInd Bank 7.60 --- Jammu & Kashmir Bank 7.00 --- Karur Vysya Bank 7.40 --- Karnataka Bank 6.90 --- Kotak Mahindra Bank 6.70 --- RBL Bank 7.60 0.25% on all tenures SBM Bank India 8.25 --- South Indian Bank 6.50 --- Tamilnad Mercantile Bank 7.00 --- YES Bank 8.25 --- PUBLIC SECTOR BANKS Bank of Baroda 7.40 0.10% on tenures of above 1 year to 5 years Bank of India 6.75 0.15% on tenures of 180 days to 10 years Bank of Maharashtra 7.00 --- Canara Bank 7.20 0.10% on tenure of 444 days Central Bank of India 7.25 --- Indian Bank 6.75 0.25% on all tenures Indian Overseas Bank 7.00 0.25% on all tenures Punjab National Bank 6.75 0.30% for tenures up to 5 years Punjab & Sind Bank 7.00 0.15% on tenure of 333 days, 444 days, 555 days, 777 days, 999 days & PSB Green Earth (22 months, 44 months, 66 months) State Bank of India 7.50 0.10% on all tenures Union Bank of India 7.00 0.25% on all tenures Source: Paisabazaar data as on May 7, 2025 SCSS Interest Rate in 2025 The Senior Citizen Savings Scheme (SCSS) is one of the popular post office schemes that offers a fixed interest rate of 8.2% per annum for the first quarter of FY 2025-26, applicable from April to June 2025. This rate is compounded and paid quarterly, providing a steady income stream for senior citizens. The current rate of 8.2% remains competitive compared to most major banks' FD offerings but is lower than the rates offered by some small finance banks like SSFB. Federal Bank new service charges: Check latest ATM charges, cash deposit charges, locker rent and more changes from June 1, 2025 Safety and Security Senior Citizen Fixed Deposits: FDs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, which includes both principal and interest, ensuring their safety. However, FDs that exceed Rs 5 lakh carry some risk in case of bank failure. SCSS: The scheme is fully backed by the Government of India, offering superior safety for the entire investment (up to Rs 30 lakh). Tax Benefits Senior Citizen FDs: Tax-saving FDs (5-year tenure) qualify for Section 80C deductions up to Rs 1.5 lakh, and the TDS exemption limit for FY 2025-26 is Rs 1 lakh. Interest above these limits is taxable per the individual's slab. SCSS: Also qualifies for Section 80C deductions up to Rs 1.5 lakh. Interest is taxable, with TDS deducted if annual interest exceeds Rs 1 lakh. Both options are similar in tax treatment, but SCSS's quarterly interest payments may lead to earlier tax implications. Deposit limits Senior Citizen FDs: No upper limit, allowing senior citizens to invest any amount, though rates may vary for bulk deposits (e.g., above Rs 3 crore). Splitting large sums across multiple banks can maximise DICGC coverage. SCSS: Capped at Rs 30 lakh per individual across all accounts, limiting its use for those with larger savings.
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Business Standard
25-04-2025
- Business
- Business Standard
Explained: Can you break your SCSS deposit early, and what would it cost?
The Senior Citizen Savings Scheme (SCSS) has become one of the go-to investment options for senior citizens in India, offering a stable and secure way to grow their savings. With its high interest rates, government backing, and quarterly payouts, it's no wonder that SCSS is favored by retirees looking for predictable returns. However, life is unpredictable, and sometimes, unforeseen financial needs arise that require you to access your funds earlier than planned. So, what happens if you need to break your SCSS deposit early? Is it possible, and what are the consequences? What is the SCSS scheme? The Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme designed to provide a regular income stream for senior citizens. It offers a fixed interest rate and allows for both individual and joint accounts, primarily benefiting those 60 years and older. The scheme is a safe investment option, backed by the Indian government, and offers tax benefits. The Senior Citizen Savings Scheme was introduced in 2004 as a part of post office savings scheme, to provide financial security to senior citizens who are in need of a steady income post retirement. Residents aged more than 60 years, can individually or jointly open SCSS account. It can either be opened in a post office branch or an authorized bank. It offers an interest rate of 8.2% for the current quarter. This scheme supports a maximum deposit of Rs.30 lakhs, with a tenure of 5 years which can be further extended to 3 years. Deductions under section 80C of Income Tax Act is allowed for this scheme. However, interest on deposits are fully taxable. The current interest rate applicable to SCSS is 8.2% p.a. This interest rate is applicable for first quarter of financial year 2025-26. At 8.2% p.a. interest rate and an investment amount of Rs.30 lakh, the monthly income is stated to be Rs.20,500 per month for each investor. The maturity period of SCSS is 5 years. However, individuals can extend the maturity period for 3 more years by submitting an application. The application for an extension of maturity should be within one year from the date of maturity. Withdrawals from Senior Citizens Savings Scheme accounts will be exempt from tax starting August 29, 2024. Senior citizens are predominantly benefitted from this amendment. TDS (Tax Deducted at Source) is applicable on the interest earned if it exceeds ₹50,000 in a financial year (for senior citizens). Investments up to Rs 1.5 lakh in SCSS qualify for tax deductions under Section 80C of the Income Tax Act. Premature withdrawal before maturity: Yes, but with a cost SCSS has a default lock-in period of five years. However, the government does allow early closure—with penalties based on how long you've been invested. Value Research breaks this down: If withdrawn before 1 year: No interest is payable. Any interest already credited will be recovered from your principal. If withdrawn after 1 year but before 2 years: A penalty of 1.5 per cent of the deposit amount is deducted. If withdrawn after 2 years but before 5 years: A penalty of 1 per cent of the deposit amount is deducted ClearTax does a further deep dive: Within 1 Year of Deposit: If you wish to withdraw the SCSS deposit before the first year, the interest earned will be penalized. A penalty of 1.5% will be charged on the deposit amount, which means you will lose some interest earned on the deposit. After 1 Year but Before 2 Years: If the deposit is withdrawn after one year but before two years, the penalty reduces to 1%. After 2 Years: If you withdraw the deposit after two years but before the completion of the full five-year tenure, the penalty continues to be 1% of the deposit amount. It's important to note that if you break your SCSS account before maturity, you won't get the full interest rate and could face some loss of earnings. Conditions: One exception to the premature withdrawal penalty is in the unfortunate event of the account holder's death. If the account holder passes away, the SCSS deposit can be withdrawn without incurring any penalty on the interest. In this case, the nominee or legal heir will be entitled to the principal and the interest earned, without the penalty charges that would normally apply to premature withdrawals. Tax Implications of Premature Withdrawal When you break your SCSS deposit early, the tax treatment on the interest earned remains the same. Interest earned on SCSS is subject to taxation, and the amount is taxed according to your income tax bracket. However, the early withdrawal may affect how much you ultimately pay in taxes due to the reduced interest earnings after the penalty is applied. Additionally, Tax Deducted at Source (TDS) will be applicable if the interest earned exceeds ₹50,000 in a financial year (for senior citizens). The TDS will be deducted regardless of whether the deposit is withdrawn prematurely or not. What about maturity? You now have more flexibility "Previously, SCSS allowed only a one-time extension of three years. But rules have changed. Now, you can extend your SCSS deposit indefinitely in blocks of three years each. This is great news for retirees who don't want to reinvest elsewhere and prefer to continue earning a fixed return in a secure scheme. The extension must be requested within one year of maturity. The interest rate applicable will be the one prevailing at the time of extension," explained Value Research in a note. Can You Withdraw During the Extension Period of SCSS? Yes, you can withdraw from your SCSS account during the extension period. After the initial 5-year term, the SCSS account can be extended for an additional 3 years. The best part? Once you have completed one year of this extended block, there is no penalty for premature withdrawal. This offers senior citizens more flexibility, as they can still access their funds without being penalized. Why is This Advantageous? This is a key benefit of the SCSS extension feature. If your circumstances change or if an unexpected financial need arises, you don't have to be permanently locked into the scheme. The ability to withdraw funds after a year during the extension period means that, while you continue to earn interest, you are not stuck if you need liquidity. This flexibility makes SCSS a relatively adaptable investment for seniors who may need to adjust their financial plans over time. How to Exit the SCSS Scheme (During or After Extension Period) To exit the scheme, whether during the original five-year term or during an extended period, you need to follow a simple process: Visit the Bank or Post Office: Go to the bank or post office where you hold your SCSS account. Submit Form 2: Fill out and submit Form 2, which is the form used for premature closure of your SCSS account. Provide Necessary Documentation: You may also need to submit some documents, such as your account details, proof of identity, and any other documents required by the institution. Once your request is processed, you will receive the principal amount and the interest earned, minus any penalties if applicable (which is not the case during the extension period after one year). This flexibility provides senior citizens with peace of mind, knowing that their funds are not entirely locked in if they need them earlier than planned.
Time of India
23-04-2025
- Business
- Time of India
Retirement plan: Where to invest if you have a monthly pension of Rs 30,000
Tired of too many ads? Remove Ads Recurring Deposits and Fixed Deposits Tired of too many ads? Remove Ads Senior Citizen Savings Scheme (SCSS) Tax-free bonds for Senior Citizens Debt Mutual Funds Tired of too many ads? Remove Ads If you are a senior citizen with a monthly retirement pension of Rs 30,000, a market expert recommends that with pension being one of the primary sources of income post retirement, one must invest according to risk tolerance and needs for cash flow.'A more conservative approach is typically recommended for senior citizens; thus investments may be skewed toward less risky assets such as recurring deposits, fixed deposits , Senior Citizen Savings Scheme, tax free bonds for senior citizens, and debt mutual funds ,' Vishal Dhawan, CEO, Plan Ahead Wealth Advisors, a wealth management firm in expert shares the current interest rate offered by these investment options and the investable limit in these to Dhawan, 'Recurring Deposits (RDs) and Fixed Deposits (FDs) are popular among senior citizens for their simplicity, safety, and consistent returns as they serve as a dependable source of passive income during per the latest Union Budget, the TDS exemption limit on interest income for senior citizens has been increased to Rs 1 lakh, up from the earlier Rs 50,000, enhancing their post-tax returns, Dhawan Senior Citizen Savings Scheme (SCSS) currently offers an attractive interest rate of 8.2% as of Q1 FY 2025-26 and it qualifies for tax deductions under Section 80C of the Income Tax Act, though the interest earned is fully taxable, the expert scheme has a maturity period of five years, extendable by three more years upon expert is of the opinion that the debt asset class is becoming increasingly attractive, with interest rates peaking and markets anticipating a potential rate cut and additionally the tax-free bonds issued in earlier years are now available for trading in the cash segment of stock exchanges like BSE and NSE.'When investing, it's advisable to choose bonds with high liquidity and competitive yield to maturity (YTM) to ensure ease of entry and exit. Currently, AAA-rated corporate bonds are offering yields of around 7.50%, making them a good option for conservative investors seeking stable returns,' Dhawan Funds are mutual funds that primarily invest in fixed-income instruments. Sharing the advantage that debt mutual funds offer, Dhawan mentioned that unlike SCSS, they offer flexibility and liquidity, allowing investors to withdraw funds at any time and they also support annual portfolio rebalancing.'For instance, if the equity portion of your portfolio underperforms, you can draw from debt funds to realign your asset allocation. However, it's important to note that returns from debt funds are bond market-linked and not guaranteed, as they are influenced by interest rate fluctuations. Additionally, capital gains from debt funds are now taxed as per the investor's income tax slab, which may affect overall post-tax returns. The higher tax slabs under the new tax regime from FY25-26 would help though,' the expert further to the data by AMFI, there are around 16 sub-categories under debt mutual funds and one debt oriented hybrid mutual fund category. There are five equity oriented hybrid mutual fund categories as well which maintain a small allocation in the fixed income. Note, the multi asset allocation funds which are equity oriented hybrid funds are taxed as per the tax structure applicable for debt mutual various options available for investment in mutual funds, Dhawan advises that while selecting mutual funds, senior citizens should prioritize steady returns, liquidity, and tax senior citizen, besides selecting short-term debt funds and corporate bonds funds, can also consider multi-asset funds, balanced advantage funds, equity savings funds and conservative hybrid funds as options is what the expert recommends.'Balanced Advantage Funds also prove to be a good option as the fund manager shifts between equity and debt based on market conditions, offering flexibility and reduced risk, making it ideal for investors looking to beat inflation while keeping moderate risk. Conservative hybrid and equity savings funds invest primarily in debt with upto 35% in equities giving the investor appropriate exposure to growth assets along with stability,' he you near retirement or post retirement, one should lighten the equity holding and balance the exposure between debt and equity as one grows old the portfolio should tilt more towards balance the portfolio between debt and equity, Dhawan advises that, 'For senior citizens, equity allocation should be limited to 20%–30%, focused on large-caps. Around 60%–65% should be in fixed income, prioritizing government-backed schemes. With rate cuts expected, adding duration to the portfolio can be beneficial to a certain extent. The remaining can go into alternatives like gold, REITs, and InvITs upto a small extent.': Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@ alongwith your age, risk profile, and Twitter handle
