In keeping with the recent firming of interest rates in the economy, the government recently raised the interest rates on the majority of post office savings plans that do not qualify for income tax benefits.
According to a notification from the finance ministry, rates for deposits up to 5%, NSC, senior citizen savings plans, and Kisan Vikas Patra (KVP), where income accruing is taxable, have increased by up to 1.1 percentage points. Whereas, the interest rate for the popular PPF and the girl child savings programme Sukanya Samriddhi was maintained.
For the fourth quarter of FY 2022–23, the Senior Citizen Savings Scheme (SCSS) interest rate after the increase is 8.0% annually. Anyone who is over the age of 60 is eligible for this scheme. Retirees above the age of 55 but under the age of 60 may also invest in this scheme if they invest within a month of obtaining retirement payments. You can start an SCSS account for as low as Rs 1,000. Your investment cap is Rs. 15 lakh. The account only pays interest once every three months, so keep that in mind. The account has a five-year maturity period with a three-year extension option.
Investment under this scheme qualifies for the benefit of section 80C of Income Tax Act, 1961.
Interest:
- Interest shall be payable on a quarterly basis and applicable from the date of deposit to 31st March/30th June/30th September/31st December.
- If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.
- Interest can be drawn through auto credit into a savings account standing at the same post office, or ECS. In case of SCSS account at CBS Post offices, monthly interest can be credited into savings account standing at any CBS Post Offices.
- Interest is taxable if total interest in all SCSS accounts exceeds Rs.50,000 in a financial year and TDS at the prescribed rate shall be deducted from the total interest paid. No TDS will be deducted if form 15 G/15H is submitted and accrued interest is not above the prescribed limit.
READ: Fixed Deposit for Senior Citizens: Get high interest rates of over 8 percent from THESE Banks, know TDS charges
