SBI: For individuals seeking to grow their investments with minimal risk, a Fixed Deposit (FD) is an ideal choice. Likewise, the government-supported Senior Citizen Savings Scheme (SCSS) presents a commendable investment opportunity for senior citizens, serving as a robust means to build a retirement fund. This scheme offers quarterly interest payments to investors, raising an important question for seniors: should they opt for a bank FD or the SCSS? Both options allow for flexibility in investment, permitting either monthly contributions or a one-time lump sum investment. To illustrate, let us consider an investment of Rs 7,50,000 and compare the benefits of a 5-year FD with the State Bank of India (SBI) against the SCSS.
SBI FD Interest Rates:
– For general citizens: 3.50% to 7.25% per annum
– For senior citizens: 4.00% to 7.75% per annum
– SBI Tax Saving FD: 6.50% for general citizens and 7.50% for senior citizens
SBI 5-Year FD Calculation:
– Deposit amount: Rs 7,50,000
– Total interest earned: Rs 2,85,315
– Maturity amount: Rs 10,35,315
Interest Rates for the Senior Citizen Savings Scheme (SCSS):
– Current rate (effective January 1, 2024): 8.2% per annum
– Interest is payable quarterly (on April 1, July 1, October 1, and January 1)
Eligibility Criteria for SCSS:
Individuals aged 60 years and older are eligible. Those aged 55 to 60 years who have opted for a Voluntary Retirement Scheme (VRS) may also invest. A joint account can be established under this scheme only with a spouse.
SCSS Deposit Limits and Tax Benefits:
– Minimum deposit: Rs 1,000
– Maximum deposit: Rs 30,00,000
– Tax benefits: Investments qualify for deductions under section 80C.
SCSS Calculation:
– Maturity amount: Rs 10,57,500
– Quarterly interest: Rs 15,375
– Total interest earned over 5 years: Rs 3,07,500