Senior citizens can start this government scheme by investing just ₹ 1000, they will get 8.2% guaranteed return

Senior Citizen Savings Scheme is a safe and reliable investment option for the elderly. This scheme not only provides financial stability but also makes life easier.

Senior Citizen Savings Scheme: The interest rate of Senior Citizen Savings Scheme (SCSS), considered a reliable source of financial security and regular income for the elderly, has been fixed for the April-June 2025 quarter. The government has not made any change in the interest rates of small savings schemes this time, due to which the interest rate of SCSS will remain at 8.2% per annum. This scheme is available through post offices and select banks and is quite popular among senior citizens looking for stable income after retirement. The government reviews the interest rates of these schemes every quarter, but this time it was decided to keep the rates stable.

SCSS not only provides the option of safe investment, but also provides benefits like tax exemption and interest payment every three months. An account can be opened in this scheme with a minimum of Rs 1,000 and the maximum investment limit is up to Rs 30 lakh. Let us understand in detail the rules, interest rate, taxation and premature closure conditions of this scheme.

Interest rate and investment terms

Senior citizens investing in SCSS will get an annual interest rate of 8.2% from April to June 2025. This interest is deposited in the account every quarter i.e. three months, which provides regular income support to the elderly. The government reviews interest rates every quarter, but this time there was no increase or reduction. This means that investors will get the same rate this time as in the last quarter.

To open an account in this scheme, a minimum of Rs 1,000 has to be deposited and after that the amount can be increased in multiples of 1,000. However, a senior citizen cannot invest more than Rs 30 lakh in this scheme. This limit applies to the total investment of all active SCSS accounts. The duration of the scheme is 5 years, which can be extended for 3 years later. It is beneficial for those who want stable returns for a long time.

Tax rules and benefits

Investing in SCSS also provides tax relief. Under Section 80C of the Income Tax Act, investors can claim a deduction of up to Rs 1.5 lakh. However, the interest received from this scheme is fully taxable. If the total interest received from all SCSS accounts in a financial year exceeds Rs 1 lakh, then TDS (Tax Deducted at Source) is deducted. Earlier this limit was Rs 50,000, but in Budget 2025 it was increased to Rs 1 lakh. This new rule has come into effect from April 1, 2025.

If investors submit Form 15G or 15H and their total interest income is less than the prescribed limit, then TDS will not be deducted. This facility is especially helpful for the elderly who have limited income and want to avoid additional tax burden.

Rules for closing the account before time

SCSS also gives flexibility to investors. After opening the account, it can be closed anytime, but there are some conditions and penalties for this. If the account is closed before 1 year, no interest will be given and the interest accumulated earlier will also be withdrawn. At the same time, a penalty of 1.5% of the principal amount is deducted for closing after 1 year but before 2 years. If the account is closed after 2 years but before 5 years, then 1% is deducted.

After completion of the 5-year period, the account can be extended for 3 years. In this extended period, if the account is closed after 1 year, then there is no penalty. These rules give investors the freedom to take a decision according to their needs, but caution is advised on premature withdrawal.

What are the conditions in SCSS?

If the account holder dies before the period of 5 years, then the interest rate of the post office savings account is applicable on the account. But if the account is jointly in the name of husband and wife or one of the husband and wife is the sole nominee, then they can continue the account at the basic interest rate of SCSS. For this, it is necessary that they themselves are eligible for SCSS and their total investment limit does not exceed Rs 30 lakh.

The account matures after 5 years and to close it, an application has to be submitted in the post office along with the passbook. If the investor wishes, he can extend the account for 3 years within 1 year of maturity. During this time, the interest rate will be the same as will be applicable for new SCSS accounts at the time of maturity of the original account.

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