Comparing Senior Citizens Savings Scheme with Bank FDs: Rates, Taxes, and Limits

Senior citizens often get slightly higher interest rates on bank fixed deposits (FDs) than other investors. Similarly, the government offers specialized programs for them, such as the Senior Citizens Savings Scheme. Both FDs and SCSS have several features, such as the requirement to keep the money invested for a set amount of time. They do, however, differ in certain ways and provide specific benefits.

According to reports, here’s a comparison of the interest rates given by the Senior People Savings Scheme to the rates on 5-year fixed deposits for senior people, as well as other significant factors to consider.

SCSS vs FDs: Eligibility

  • SCSS: If you are 60 or older, you can establish a SCSS account. Retired civilian employees aged 55 to 60 can register a SCSS account, but they must invest within one month of receiving their retirement payments. Retired defence personnel aged 50 to 60 have the same requirement: they must invest within a month after receiving retirement payments.
  • FD: Senior citizen fixed deposits can be opened by anybody aged 60 or older.

SCSS vs. FDs: Tax Advantages

  • SCSS: The Senior Citizens Savings Scheme allows you to deduct up to Rs 1.5 lakh in taxes over five years under Section 80C of the Indian Income Tax Act, 1961.
  • FDs: Investors with tax-saving fixed deposits of five years or longer are eligible for income tax deductions.

SCSS vs. FDs: Interest rates

  • SCSS: Every three months, the government examines and increases the interest rate for the Senior Citizens Savings Scheme. Currently, the rate is 8.2%.
  • FDs: Banks can modify their rates at any time, so the precise rate you receive is determined by the bank you pick. Keep in mind that interest rates vary depending on whether you invest in a standard 5-year fixed deposit or a tax-saving fixed deposit.

SCSS vs FDs: Deposit Limits

  • SCSS: You can contribute up to Rs 30 lakh to the Senior Citizens’ Savings Scheme.
  • FDs: Fixed deposits allow you to invest an unlimited amount of money. However, interest rates might differ depending on whether you pick a conventional 5-year FD or a tax-saving FD (with a ceiling of Rs 1.5 lakh) and if the total investment is less than or more than Rs 2 crore.

SCSS vs FDs: Tax Deduction at Source (TDS)

If your yearly interest income exceeds Rs 50,000, you must pay TDS on your SCSS and fixed deposits. However, if your interest income in a fiscal year is less than Rs 50,000 and you submit Form 15G/15H to the post office or bank, TDS will not be deducted.

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Stuti Talwar

Expressing my thoughts through my words. While curating any post, blog, or article I'm committed to various details like spelling, grammar, and sentence formation. I always conduct deep research and am adaptable to all niches. Open-minded, ambitious, and have an understanding of various content pillars. Grasp and learn things quickly.

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