India Post or Department of Posts, which operates the postal system of the country, also offers nine savings schemes with different interest rates.
India Post or Department of Posts, which operates the postal system of the country, also offers nine savings schemes with different interest rates. One such savings scheme offered by India Post is the Senior Citizen Savings Scheme (SCSS). The interest rates applicable to these schemes are currently reviewed by the ministry of finance on a quarterly basis.
Here are key things to know about post office senior citizen savings scheme (SCSS):
An individual of 60 years or above can open SCSS account. Also, if any person who is 55 years or more but less than 60 years, and has retired on superannuation or under VRS (Voluntary Retirement Scheme) can also open the account subject to the certain conditions.
India Post currently offers interest at the rate of 7.4 percent on investment in the SCSS at designated post office branches.
The minimum amount required to open the SCSS account is Rs 1,000, while the maximum amount should not exceed Rs 15 lakh. The account can be opened by cash if the amount is below Rs 1 lakh. However, if the amount is Rs. 1 lakh or more, one needs to deposit a cheque.
The maturity period of SCSS is five years. After maturity, the account can be extended for further three years within one year of the maturity by giving application in prescribed format. In such cases, account can be closed at any time after expiry of one year of extension without any deduction.
(Also read: How to maximize your mutual fund SIP returns)
Income Tax Benefit
Investments under the scheme also qualify for the income tax benefit under Section 80C of the Income Tax Act.
Premature closure is allowed after one year on deduction of an amount equal to 1.5 percent of the deposit. After two years, one percent of the deposit is deducted.