Tuesday, July 23, 2024

Senior Citizen Scheme

What is Senior Citizen Scheme
A new savings scheme called ‘Senior Citizens Savings Scheme’ has been notified with effect from August 2, 2004. The Scheme is for the benefit of senior citizens and maturity period of the deposit will be five years, extendable by another three years.  Initially the scheme will be available through designated post offices through out the country. 

The minimum investment is Rs.1000 and in multiples of Rs.1000 subject to a maximum of Rs.15 lakh. 

Citizens of 60 years of age and above are eligible to invest. Single or joint account (with spouse only) can be opened. Citizens who have retired under a voluntary or a special voluntary retirement scheme and have attained the age of 55 years are also eligible, subject to specified conditions.

In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.

The deposit will carry an interest of  9.20% per annum applicable from 1/4/2014 (taxable). The maturity period of the deposit will be five years, extendable by another three years.

Premature withdrawal after a period of one year will be allowed, subject to some deductions i.e 1.5 % till two years and 1% after two years.

The investments in the scheme will be non-tradable and non-transferable. However, nomination facility will be available.

Non-Resident Indians and Hindu Undivided Families are not eligible to invest in the scheme.

The deposit will carry an interest of 9.20 % per annum applicable from 1/4/2014 (taxable) payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December. In case of Premature closure after one year, there will be deduction of 1.5% interest & after 2 years 1% interest (deduction from the deposit.). 

This Scheme is most beneficial to Senior citizens and provides a high rate of interest. Although the interest on the deposit is taxable, the deposits themselves are tax free. As the post office is a department of the government of India, it is a safe investment. The principal amount is assured. The investment under this scheme qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1-4-2007.

How to Start Post office Senior Citizens account
A Senior Citizen Account can be opened through any designated post office through out the country. The account can be opened by any individual 60 years of age and above either individually, or jointly (with spouse only).