Kolkata: SCSS, or Senior Citizen Savings Scheme is a flagship guaranteed-return investment scheme introduced by the Centre. As the name implies it is directed at senior citizens, ie, who are past the age of 60. It offers a higher rate of interest to help this section of people who are past their earning age. It is available in post offices and designated banks. SCSS is a popular investment instrument with the elders, especially the retirees, in India.
Another extremely popular investment option with senior citizens in India are bank fixed deposits. For the moment, let’s confine our discussion to State Bank of India (SBI) Fixed Deposits (FD). SBI is only India’s biggest commercial bank but also an institution that boasts of a customer base of more than 50 crore, which is more than the cumulative population of the US and Russia combined. Predictably, it’s FDs are popular with millions in India. Let’s do a comparative study of SCSS and SBI FD.
SCSS calculator: Rs 5 lakh investment for 5 years
Let’s assume a senior citizens has Rs 5 lakh which he would like to park for 5 years. Incidentally, Senior Citizen Savings Scheme has a maturity period of five years. Though the account holder can extend the account for a further three years — or for a total of eight years — let’s take five years as the period for which our man will keep his investment. The online SCSS calculator tell us that if Rs 5 lakh is parked for 5 years, the depositor will get Rs 7,05,000 as the total amount. It will translate into a quarterly interest of Rs 10,250. It means that the total interest earned by the depositor in 5 years is Rs 2,05,000 or Rs 2.05 lakh.
SBI FD interest rate: Rs 5 lakh deposit for 5 years
Now let’s turn to the maturity value calculator of FD that is available online at the SBI portal. The interest rate offered by SBI on an FD with a maturity period of five years is 7.5%. The calculator will show if an amount of Rs 5 lakh is put into an FD for five years by someone aged more than 60 years, eh/she will get a maturity value of Rs 7,24,974. Therefore, the total interest income is Rs 2,24,974. One thing to remember is that while SCSS offers income tax benefits according to section 80C of the Income Tax Act 1961, 5-year FDs will also offer the same. However, these deductions are available only in the old tax regime.
Both Senior Citizen Savings Scheme and Fixed Deposits are favourite investment instruments with millions of senior citizens of India. If you have Rs 5 lakh to park for five years, where will you put your money — SCSS or 5-year FD of State bank of India (SBI)? Check calculations below. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
