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Tag: SCSS scheme

  • How senior residents can take advantage of from SCSS scheme from FY23-24?

    Senior Citizen Savings Scheme (SCSS) is a government-backed financial savings scheme in India for senior residents 60 years of age and up. The SCSS pays a better rate of interest than commonplace fastened deposits and financial savings accounts. The SCSS rate of interest was raised to eight% in December for the final quarter of the fiscal yr 2022-23, which is considerably increased than the elevated inflation ranges. Elderly people can make investments as much as ₹30 lakh within the put up workplace’s Senior Citizen Savings Scheme (SCSS) from April 1, 2023, up from ₹15 lakh earlier than, as acknowledged by Finance Minister Nirmala Sitharaman in her Budget 2023 presentation. With the present SCSS rate of interest, increased deposit restrict, and tax profit underneath Section 80C of the Income Tax Act of 1961, right here’s how senior residents can take advantage of from SCSS scheme from FY23-24.

    MP Deepu, Co-Founder, SeniorWorld

    Senior residents can take advantage of from the Senior Citizen Savings Scheme (SCSS) scheme from FY23-24 by following the following pointers:

    1. Invest early: Senior residents ought to put money into the SCSS scheme as early as doable within the monetary yr to maximise their returns. 

    2. Invest the utmost quantity: Senior residents ought to make investments the utmost quantity allowed underneath the SCSS scheme, which is Rs. 30 lakhs. This will assist them earn increased returns on their funding.

    3. Invest for the longest doable tenure: Senior residents ought to go for the longest doable tenure underneath the SCSS scheme, which is 5 years. This will assist them earn a better charge of curiosity and maximize their returns.

    4. Take benefit of tax advantages: Senior residents can benefit from the tax advantages supplied underneath the SCSS scheme. The curiosity (as much as 50000 is tax-free) earned on the funding is taxable, however senior residents can declare a deduction underneath Section 80C of the Income Tax Act for the quantity invested.

    5. Regularly monitor rates of interest: Senior residents ought to frequently monitor the rates of interest supplied underneath the SCSS scheme to make sure that they’re getting the very best returns on their investments. The rate of interest is revised on a quarterly foundation.

    M. Kishore Babu, Dean MHS, KL Deemed to be University

    SCSS is a senior citizen saving scheme launched by the Government of India, in 2004, meant to offer a gentle and safe earnings for senior residents. Understanding the scheme’s options and advantages is the firstly step that one ought to search for SCSS, a government-backed financial savings scheme particularly designed for residents aged 60 years and above, presents increased rates of interest than different fixed-income devices and supplies a daily stream of earnings for the senior residents.

    One of the important thing advantages of the SCSS scheme is that it presents a assured return, which isn’t depending on market fluctuations. This makes it a beautiful possibility for senior residents who need to safe their retirement earnings. Additionally, the rate of interest on SCSS is increased than different fixed-income devices like fastened deposits, making it a great possibility for these searching for increased returns.

    Senior residents can make investments as much as Rs. 15 lakhs within the SCSS scheme for a interval of 5 years, which could be prolonged for an extra 3 years. The curiosity on the SCSS scheme is paid out quarterly, offering a daily supply of earnings for senior residents. The curiosity earned on the SCSS scheme can also be tax-deductible, making it a beautiful possibility for these trying to save on taxes.

    To take advantage of out of the SCSS scheme, senior residents ought to rigorously consider their funding objectives and monetary wants. They also needs to contemplate the present market situations and the rate of interest supplied by the scheme earlier than investing. By investing within the SCSS scheme, senior residents can safe their retirement earnings and luxuriate in increased returns on their investments.

     

     

     

     

     

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  • How senior residents can take advantage of from a portfolio of SCSS & PMVVY schemes?

    On the opposite hand, the PMVVY scheme would provide a assured pension of seven.40% p.a. payable month-to-month for the monetary 12 months 2022–23. This assured charge of pension shall be payable for the complete coverage time period of 10 years for all insurance policies bought as much as March 31, 2023. The programme is scheduled to finish on March 31, 2023, and won’t be accessible beginning on April 1 or FY24 except the federal government proclaims an extension. Let’s hear from specialists on how aged people over 60 in search of government-backed common revenue with inflation-beating and risk-free returns, like PMVVY and SCSS, could essentially the most from these two schemes invested by means of a single portfolio.

    Harsh Gahlaut, CEO, FinEdge

    In the latest Union Budget, we noticed the restrict for SCSS being doubled from 15 lakhs to 30 lakhs. However, senior residents shouldn’t be in a rush to hurry into authorities backed schemes with their post-retirement financial savings as they signify a sub-optimal resolution. First, though each PMVVY and SCSS provide an FD-plus return of 8% now, returns are totally taxable on the margin. Second, there’s a tough lock-in on the invested quantity for five years (10 years for PMVVY). As a senior citizen, three issues matter – entry to capital throughout occasions reminiscent of medical emergencies, tax environment friendly revenue, and inflation beating capital development. Unfortunately, authorities schemes like SCSS and PMVVY don’t test any of the three bins.

    We consider {that a} well-designed portfolio comprising of debt and fairness mutual funds, coupled with a wise SWP (Systematic Withdrawal Plan) technique represents a much better resolution to all of the three issues outlined above. With lifespans going up and the danger of outliving one’s capital turning into actual, senior residents can not afford to undertake a totally risk-averse method and ignore the wealth creation potential of equities. Depending upon their distinctive scenario, we now really advise retirees to speculate something from 15% to 40% of their retirement funds into equities, whereas deploying the remaining by means of a considered mixture of TMF’s, liquid funds, medium length debt funds and even longer length debt funds with an SWP technique in-built to pay them a “month-to-month wage”.

    Abhinav Angirish- Founder, Investonline.in

    There was some excellent news for the aged within the price range. Nirmala Sitharaman, has elevated the funding restrict for the Senior Citizens Savings Scheme (SCSS) to ₹30 lakh from ₹15 lakh and the funding restrict for the Post Office Monthly Income Scheme (POMIS) to ₹9 lakh. For individuals over 60 in search of a government-backed common revenue with practically risk-free returns, the 2 schemes—SCSS and PMVVY—are pretty good selections. But the PMVVY scheme is ready to run out in March 2023 as the federal government has determined to discontinue the identical. The excellent news is that the federal government has elevated the cap of the Senior Citizens Savings Scheme (SCSS).

    Nevertheless, the reality is that solely debt-based methods can’t outperform inflation over the long term. Because of this, it is strongly recommended to allocate a few of one's retirement financial savings to fairness investments. It does not need to be an enormous chunk of your portfolio; something from 25% to 40% fairness publicity is perhaps thought of primarily based on the scale of the corpus, danger tolerance, and revenue wants.

    This will be certain that a minimum of some portion of the corpus will increase at a charge that’s quicker than the speed of inflation. It is beneficial for retirees to put money into equity-related merchandise together with large-cap index funds, flexi-cap funds, and aggressive hybrid funds.

    Yash Joshi, Co-Founder and Director UpperCrust Wealth Pvt. ltd

    Senior residents can profit from the Senior Citizen Savings Scheme (SCSS) and Pradhan Mantri Vaya Vandana Yojana (PMVVY) by contemplating the next factors:

    Invest in SCSS and PMVVY: Senior residents who’re in search of a safe and assured supply of revenue ought to take into account investing in SCSS and PMVVY. Both these schemes are particularly designed for senior residents and provide larger rates of interest than different fixed-income funding choices.

    Know the eligibility standards: To put money into SCSS, a person should be 60 years or older. In the case of PMVVY, the minimal age is 60 years, and there’s no most age restrict. Both schemes can be found to Indian residents and NRIs.

    Know the funding limits: The most funding restrict in SCSS is Rs. 15 lakhs, whereas in PMVVY, it’s Rs. 15 lakhs. Senior residents ought to take into account investing in each these schemes to maximise their returns.

    Consider the tenure: SCSS has a tenure of 5 years, which may be prolonged for one more 3 years. PMVVY has a tenure of 10 years. Senior residents ought to take into account the tenure of each these schemes whereas investing.

    Know the rates of interest: The rates of interest for SCSS and PMVVY are mounted and revised quarterly. Currently, the rate of interest for SCSS is 7.4%, whereas for PMVVY, it’s 7.4% each year.

    Tax advantages: The funding made in SCSS is eligible for a tax deduction beneath Section 80C of the Income Tax Act. The curiosity earned on SCSS is taxable. In the case of PMVVY, the curiosity earned is taxable.

    Reinvest the returns: Senior residents can reinvest the returns earned from SCSS and PMVVY to maximise their returns. The reinvestment possibility is out there in SCSS, and senior residents can make investments the maturity quantity in PMVVY to earn the next return.

    In abstract, senior residents can profit from SCSS and PMVVY by contemplating the eligibility standards, funding limits, tenure, rates of interest, tax advantages, and reinvestment choices. Senior residents ought to seek the advice of with a monetary advisor earlier than investing in any scheme to find out the perfect funding possibility for his or her particular scenario.

    Sagar Lele, WealthBasket Curator and Founder of Rupeeting

    Both SCSS and PMVVY are extraordinarily enticing schemes given their excessive returns, assured common revenue and sovereign backing – excellent for individuals trying to generate regular returns over their retirement.

    A charge of 8% on SCSS and seven.4% on PMVVY may be locked in for the following 5 and 10 years respectively if one had been to speculate earlier than March 31, 2023. Starting April 1, 2023, whereas the chance doubles down on SCSS with its higher restrict going type Rs. 15 lakh to Rs. 30 lakh, that on PMVVY will stop to exist except the federal government additional extends the scheme.

    One can profit from these schemes by investing Rs. 15 lakh every in SCSS and PMVVY now, and making an extra funding of Rs. 15 lakh in SCSS after April 1, 2023. Together, at present charges, these would yield Rs. 3.5 lakh yearly, whereas additionally returning the invested quantity at maturity.

    Additionally, a pair might open particular person accounts and double up their funding fairly than opening a single joint account, giving them the flexibility to speculate a bigger sum.

    Prashant Gupta, Founder & CEO, Caerus3 Advisors, and Think-Tank

    The funding restrict within the Senior Citizens Savings Scheme has elevated from ₹15 lakhs to ₹30 lakhs on this 12 months’s price range, which was a boon to senior residents. Senior residents also can make investments ₹15 lakhs within the Pradhan Mantri Vaya Vandana Yojana (PMVVY), however solely till March 31, 2023, after which it will likely be phased out. By investing the best quantity permitted, senior residents can profit essentially the most from these programmes. 

    With the present SCSS rate of interest of 8% yearly, they’ll make investments Rs. 15 lakhs and obtain a yearly curiosity revenue of Rs. 1.2 lakh for a interval of 5 years. Similarly to that, the present PMVVY pension charge is 7.4% yearly, which equals Rs. 1.11 lakh in revenue. Since that PMVVY has a 10-year time period, the investor is assured to get Rs. 1.11 lakh yearly for 10 years. Under these programmes, senior residents will have the ability to earn a complete of ₹2.31 lakhs every year.

    Nirav Karkera, Head of Research, Fisdom

    SCSS and PMVVY are each nice funding alternatives backed by the federal government. While each provide tax advantages, if one had been to prioritise a decrease lock-in and better returns, SCSS should clearly be most well-liked. However, at this very cut-off date, senior residents also can take a look at easy financial institution mounted deposits which can be at the moment providing enticing returns at the same time as many banks provide senior residents extra curiosity.

    Ashwini Kapila, Managing Director, GetSetUp India

    As one retires, a person’s regular month-to-month wage involves a halt. Therefore the revenue sources get restricted to the returns from investments made all through the working life and from the retirement corpus that one receives as one superannuates. This corpus then turns into the principal funding, for a stream of revenue {that a} retiree would wish to obtain. 

    These schemes have robust options, which can be enticing for Older Adults to park their retirement corpus. The schemes, being backed by the Govt, are protected; Provide an inexpensive return and most significantly for a retiree, present the choice for periodically common money flows. My personal father, a retired defence personnel has recurrently been utilizing the advantages of those schemes for his personal corpus.

    Vishal Vij, Founder and Managing Partner at Nestegg

    Both choices are for senior residents aged 60 years and above to generate risk-free revenue. SCSS is a risk-free Fixed deposit (for five years, extendable by 3 years) whereas PMVVY is a pension scheme by LIC for a length of 10 years. Current, price range hiked the max funding restrict for SCSS to 30 lacs from the present 15 lacs (beginning 1st April 2023), whereas PMVVY is more likely to finish on thirty first March 2023 (except prolonged by the govt.). Senior residents looking for danger free, predictable and govt backed common revenue on their retirement corpus might select these devices. PMVVY can solely be purchased by means of LIC till thirty first March 2023.”

    Both of those choices are meant for senior residents who’re 60 years of age or older and want to generate a safe and predictable supply of revenue. The Senior Citizen Savings Scheme (SCSS) is a hard and fast deposit that’s risk-free for a interval of 5 years, with the choice to increase for an extra 3 years. In distinction, the Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme provided by LIC that lasts for 10 years. 

    The latest price range has raised the utmost funding restrict for SCSS to 30 lakhs from the present 15 lakhs, efficient from April 1st, 2023. However, PMVVY is ready to run out on March thirty first, 2023, except prolonged by the federal government. These devices are appropriate for senior residents who wish to safe common, government-backed revenue for his or her retirement corpus. It is vital to notice that PMVVY can solely be bought by means of LIC till March thirty first, 2023.

    Ashok Chhajer As the CMD of Arihant Superstructures Ltd

    Would counsel that Senior Citizens ought to utilise the complete restrict of SCSS to avail of 8% curiosity although banks could provide higher charges within the subsequent few months however that could possibly be for a shorter length. PMVVY Scheme charges are decrease, thus could possibly be prevented.

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  • How senior residents can recover from ₹2 lakh annual revenue by means of SCSS?

    Elderly people trying to find assured revenue for his or her golden years are nonetheless discovering put up workplace schemes to be a preferable choice to take a position, regardless of the rising rates of interest of financial institution fastened deposits. The Senior Citizen Savings Scheme (SCSS), which provides an rate of interest of seven.4% per 12 months—considerably increased than the retail inflation price of seven% and even increased than the rates of interest of financial institution fastened deposits from establishments like SBI—is a transparent instance of a greater funding choice reserved just for senior residents. The Senior Citizen Savings Scheme (SCSS) is a government-backed, risk-free put up workplace scheme. It gives retirees with a assured return, and by investing in SCSS, seniors could get an annual risk-free revenue of greater than ₹2 lakh. Let’s have a look at how this works.

    Individual funding in SCSS

    In a round dated June 30, 2022, the Ministry of Finance reported that the federal government has saved the small financial savings rates of interest unchanged for the July-September quarter of the fiscal 12 months 2022-23. An particular person over 60 can open an SCSS account by making a single deposit into the account in multiples of INR 1000 and as much as a most of INR 15 lakh. Just like tax-saving fastened deposits of banks, SCSS comes with a lock-in tenure of 5 years. Now let’s assume that the present rate of interest of SCSS will stay locked in for the following 5 years and a senior citizen is able to make investments ₹15 lakh within the scheme for five years.

    Therefore, a deposit of ₹15 lakh would earn ₹27,750 as a quarterly curiosity cost on the present rate of interest of seven.4% and the annual curiosity cost shall be ₹111,000. Hence at maturity, the account holder will get a maturity quantity of ₹5,55,000. The curiosity quantity beneath SCSS is payable on a quarterly foundation and is relevant from the date of deposit to the next dates: March 31, June 30, September 30, and December 31. The price of curiosity that was in impact on the day of the deposit stays locked in for the tenure of 5 years, aside from the truth that the rates of interest on small financial savings schemes are revised on a quarterly foundation by the Government of India.

    View Full Image

    SCSS Calculator (cleartax.in) Impact of joint funding in SCSS

    The aforementioned illustration solely represents one funding that an individual makes. However, SCSS additionally permits joint deposits, thus a senior citizen and his partner can register a joint account. However, solely the primary account holder is accountable for the entire deposit quantity in a joint account. The most funding cap of ₹15 lakh shall be doubled to ₹30 lakh in joint account instances. In this occasion, the aged couple’s total yearly curiosity from every of their SCSS accounts could be ( ₹111,000×2 = ₹222,000). Hence, the joint couple would get a yearly risk-free revenue of ₹2.22 lakh by investing in SCSS. “In case partner is a joint holder or a sole nominee, account might be continued until maturity if partner is eligible to open SCSS account and never have one other SCSS Account,” India Post stated on its web site.

    Key takeaways of SCSS

    Investments made beneath this plan are eligible for the tax deductions supplied by part 80C of the 1961 Income Tax Act. If the general curiosity earned throughout all SCSS accounts surpasses Rs. 50,000 in a fiscal 12 months, the curiosity is taxable, and TDS on the applicable price must be deducted from the overall curiosity earned. If type 15 G/15H is submitted and picked up curiosity revenue doesn’t exceed the permissible threshold, no TDS shall be utilized to the account holder. After 5 years from the date of account opening, an SCSS account could also be closed, however the account holder could select to maintain the account open for a further three years from the date of maturity.

    Within a 12 months of maturity, an SCSS account might be prolonged, and the prolonged account will proceed to accrue curiosity on the price that was in operation on the maturity date. SCSS additionally permits untimely withdrawals at any time put up the account’s lively date. For occasion, if an account is discontinued earlier than one 12 months, no curiosity could be payable; If the account is terminated after one 12 months however earlier than two years from the date of opening, 1.5% of the principal shall be deducted. If the account is closed after two years however earlier than 5 years from the date of account institution, 1% of the principal shall be deducted by the accountable put up workplace. Nevertheless, an prolonged account could also be closed or liquidated after a 12 months from the date of extension with out incurring any penalties.

     

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  • PMVVY vs SCSS: Key issues that senior residents should know

    PMVVY vs SCSS: Amid decreasing mounted deposit (FD) rates of interest at main Indian banks, senior residents are busy discovering out higher risk-free funding choice. According to tax and funding specialists, if an investor is searching for an assured funding return then Senior Citizen Saving Scheme (SCSS) is an effective choice. However, if a senior citizen is searching for an choice that may give common month-to-month earnings, then Pradhan Mantri Vaya Vandana Yojana (PMVVY) could be a good funding choice for them.

    Speaking on Senior Citizen Saving Scheme vs PMVVY Kartik Jhaveri, Director — Wealth Management at Transcend Consultants mentioned, “Both SCSS and PMVVY yields 7.4 per cent annual interest rate. But, in the case of SCSS, one’s interest rate may vary on the quarterly basis because it is one of the government-backed small saving schemes. While in the case of PMVVY, the interest rate remains fixed for the entire investment period. Since, there are speculations that Government of India (GoI) may curtail small savings scheme interest rate, PMVVY gives luxury to an investor to remain invested at an interested at the interest rate available at the time of investment.”

    Kartik Jhaveri of Transcend Consultants mentioned that in SCSS, maturity interval is 5 years whereas in PMVVY, lock-in interval is 10 years. Jhaveri went on so as to add that PMVVY is LIC plan and as per the LIC web site claims, PMVVY rate of interest until thirty first March 2022 is 7.4 per cent.

    Highlighting the liquidity angle whereas evaluating PMVVY with SCSS; SEBI registered tax and funding skilled Jitendra Solanki mentioned, “For those investors who want liquidity, SCSS is advisable for them as lock-in period in SCSS is five years while in PMVVY, one’s money gets blocked for 10 years and one can’t fish out money before 10 years of maturity period. But, in SCSS, an investor can withdraw one’s money prematurely too by paying some penalty.” He suggested senior residents to have a diversified portfolio in order that if there may be any monetary emergency, they’ll use their SCSS funding with out diluting their common month-to-month earnings.

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  • Senior Citizen Savings Scheme vs PMVVY: Which is best for senior residents?

    SCSS vs PMVVY: For a senior citizen, investing in risk-free instrument is most advisable. That why financial institution Fixed Deposit (FD) is among the most favoured funding choices among the many senior residents. But, the best way financial institution FD rate of interest has been nose-diving, the aged residents have began to have a look at different assured return choices like Senior Citizen Saving Scheme (SCSS). If a senior citizen is in search of an everyday month-to-month revenue then Pradhan Mantri Vaya Vandana Yojana (PMVVY) is one other good possibility for the 60 plus elders to park their cash. However, if we have a look at the professional opinion, in SCSS there’s extra liquidity whereas in PMVVY there’s an assured fastened month-to-month return obtainable for the investor. They suggested senior residents to have funding in each in order that one can have an assured and glued month-to-month revenue and on the similar time if there’s any monetary disaster, one can monetise one’s funding too.

    Speaking on SCSS vs PMVVY Kartik Jhaveri, Director — Wealth Management at Transcend Consultants mentioned, “Both in PMVVY and SCSS, interest rate offered is 7.4 per cent. But, in SCSS, one’s interest rate may vary on the quarterly basis while in PMVVY, one’s interest rate is fixed at the time of investment for the entire investment period.” Jhaveri mentioned that in SCSS, funding interval is for 5 years whereas in PMVVY, the funding interval is 10 years.

    Jhaveri went on so as to add that in PMVVY, one will get fastened month-to-month pension on the idea of annual rate of interest supplied on the time of funding. And in case the investor dies earlier than the maturity interval, the invested quantity or capital funding shall be refunded to the nominee of the investor. He mentioned that within the case of investor survives the ten funding interval, the capital funding shall be refunded to the investor.

    “PMVVY is an LIC plan and as per the LIC website, PMVVY interest rate offered till 31st March 2022 is 7.4 per cent,” mentioned Jhaveri.

    Advising buyers to have a look at the liquidity angle too SEBI registered tax and funding professional Jitendra Solanki mentioned, “In PMVVY, one can’t withdraw money before 10 years of maturity period while in the case of SCSS, an investor can withdraw money prematurely paying some penalty. Being a senior citizen, there can be some financial emergency coming in as post-retirement one’s avenue for income becomes limited. So, in my opinion, one should have a diversified investment in both SCSS and PMVVY so that one can have an assured monthly return plus an avenue to address the financial emergency arising in near future.”

    Solanki additionally mentioned that in SCSS, one can begin investing after attaining the age of 55 years whereas in PMVVY one have to be 60 years of age to change into eligible for investing.

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  • Investment instruments for senior residents that may fetch higher returns than financial institution FD

    For a senior citizen, an funding instrument that has minimal threat or zero threat is the best option to park cash. That’s why financial institution mounted deposit (FD) is essentially the most favoured funding software among the many sixty plus inhabitants. However, the way in which financial institution FD rate of interest has been nosediving; senior residents are unable to beat the inflation development charge by investing in financial institution FD nowadays. So, for them central government-backed Senior Citizen Saving Scheme (SCSS), which is 100 per cent risk-free, is advisable. Senior Citizen Saving Scheme rate of interest is 7.4 per cent, which is way greater than the common inflation charge of 5.5 per cent to six per cent. However, if we go by the tax and funding specialists’ view, financial institution bonds can be a greater possibility for senior residents who’re on the lookout for choices aside from financial institution FD.

    Highlighting the options of Senior Citizen Saving Scheme or SCSS Kartik Jhaveri, Director — Wealth Management at Transcend Consultants mentioned, “Senior Citizen Saving Scheme or SCSS is fully debt instrument and it is 100 per cent risk-free. As per the latest announcement by the central government, the small saving scheme is currently giving 7.4 per cent annual return to the senior citizens investing in this scheme.”

    However, Jhaveri suggested senior residents to have a look at financial institution bonds because it provides round 9 per cent annual return to the investor. He mentioned that like SCSS, financial institution bonds are additionally 100 per cent risk-free as Government of India (GoI) is the guarantor of the cash obtained by varied banks from the buyers.

    On why not authorities bonds, why financial institution bonds Jhaveri mentioned, “Unlike government bonds, bank bonds are always available for investing but to buy bank bond, one needs Demat Account.”

    On why not authorities bonds, why financial institution bonds Jhaveri mentioned, “Unlike government bonds, bank bonds are always available for investing but to buy bank bond, one needs Demat Account.”

    Speaking on SCSS vs financial institution bonds; SEBI registered tax and funding knowledgeable Jitendra Solanki mentioned, “For opening a SCSS account one has to be at least 55 years of age while in the case of bank bond, there is no such age limit. Anybody can buy bank bonds at any age provided they have a Demat Account.” Solanki additionally mentioned that in SCSS, one cannot make investments above ₹15 lakh whereas in financial institution bonds; one can make investments any quantity out there for investing.

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