Retirement plan: invest smartly to get ₹20,000 monthly income under government scheme

New Delhi (The Uttam Hindu): For working people in India, regular income after retirement often remains very low or non-existent. Consequently, if a lifetime's hard-earned savings are not invested appropriately, there's a constant fear of quickly running out. To address this concern for senior citizens and secure their financial future, the Government of India runs the Senior Citizens Savings Scheme (SCSS). This small savings scheme offers seniors the opportunity to secure investments with excellent interest rates after retirement. This scheme is quite popular due to its attractive interest rates, quarterly payments, and guaranteed government protection. Let us explain in detail the rules of this scheme and how you can earn more than 20,000 rupees per month through it.

What is Senior Citizen Savings Scheme (SCSS)?

The Senior Citizen Savings Scheme is a safe investment option supported by the Government of India, specifically designed for the elderly. Any Indian citizen over the age of 60 can avail of this scheme. Additionally, those who have taken voluntary retirement (VRS) or superannuation can also open an account between the ages of 55 and 60. Under certain conditions, the age limit for retired defense officers is 50 years. Under this scheme, you can open an account in your own name, either singly or jointly with your spouse. The maturity period of this account is five years, which can be extended by another three years if desired.

How much can you invest and what is the current interest rate?

Investments in this government scheme can be made starting with just ₹1,000, and can be made in multiples of ₹1,000 thereafter. The government recently increased the maximum investment limit to ₹30 lakh. The government currently offers an attractive interest rate of 8.2 percent on this scheme. The government periodically reviews these interest rates based on economic and inflationary trends. Interest payments under this scheme are made quarterly (on the first working day of April, July, October, and January) instead of annually, ensuring regular access to funds for retired individuals.

Mathematics of earning 20 thousand rupees every month

It's quite possible to earn a regular income of over ₹20,000 per month through this scheme. For example, if you open an SCSS account with a bank or post office after retirement and make a lump sum investment of the maximum limit of ₹30 lakh, then at the current annual interest rate of 8.2 percent, you will earn a total interest of ₹246,000 per year. If this annual interest is divided over 12 months, it amounts to ₹20,500 per month. You will receive this interest amount in your account every three months.

Tax benefits on investments and TDS rules

Investing in the Senior Citizen Savings Scheme (SCS) entitles you to a tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. However, a small detail needs to be updated here. While the principal amount deposited in the scheme is tax-exempt, the interest earned on it is added to your total income and taxable according to your tax slab. According to income tax rules, if senior citizens' interest income exceeds ₹50,000 (the ₹1 lakh information in your article may be outdated or from another source; the current rule is ₹50,000), a 10% TDS is deducted. If your total taxable income is below the basic exemption limit, you can avoid this TDS deduction by submitting Form 15H to a bank or post office.