Senior Citizen Financial savings Scheme: 5 disadvantages of investing in SCSS

5 disadvantages of investing in SCSS: Senior Citizen Financial savings Scheme (SCSS) is a government-backed financial savings scheme in India for senior residents. Any particular person above the age of 60 can make investments on this scheme, and earn the next rate of interest than financial institution fastened deposits (FDs). Whereas there are a number of benefits of investing in SCSS, senior residents also needs to know the disadvantages earlier than investing on this scheme. 

Senior Citizen Financial savings Scheme (SCSS) newest rates of interest

Banks and put up places of work provide an rate of interest of 8.2% on the Senior Residents’ Financial savings Scheme (SCSS). The government had hiked the rate of interest for the April-June quarter from 8 per cent to eight.2 per cent. As soon as the funding is completed the rate of interest stays the identical all through the tenure.

Senior Citizen Financial savings Scheme (SCSS) funding restrict

Senior residents can make investments as much as 30 lakh on this scheme from April 1, up from 15 lakh earlier than, as said by Finance Minister Nirmala Sitharaman in her Funds 2023 presentation. 

Vinit Khandare, CEO and Founder, MyFundBazaar listed out 5 disadvantages of investing in SCSS

1) TDS on SCSS curiosity

The curiosity from SCSS deposits turns into taxable if it surpasses the 50,000 cap in a monetary yr, in contrast to PPF schemes the place every thing is tax-free.

2) Mounted Curiosity Price

Whereas the SCSS account has develop into a really interesting funding alternative for senior residents because of the present rate of interest of 8.2%, people who created the account earlier at a lesser fee are at a drawback. They may shut their earlier SCSS account and begin a brand new one to reap the benefits of the current excessive fee. Nevertheless, there are charges related to prematurely canceling an SCSS account.

3) No curiosity on unclaimed curiosity earnings

Every quarter, homeowners of SCSS accounts should report their curiosity earnings. You will not obtain any additional curiosity on the cash if you happen to do not declare the curiosity that’s due every quarter.

4) Restricted Age Bracket

Solely seniors over 60 years previous are eligible to open a SCSS account. Workers within the non-public sector who need to retire early can’t reap the benefits of the programme.

5) Mounted Tenure

Investments made in SCSS accounts have a 5-year lock-in interval. A further three years might be added to the extension. Some depositors could discover it difficult to develop plans based mostly on their targets or for individuals who could need to speculate merely for a few years because of the lock-in time period. Because of the lock-in interval and the precise penalty for untimely withdrawal, sure buyers could probably expertise a liquidity disaster.

Disclaimer: The views and proposals made above are these of particular person analysts, and never of Mint. We advise buyers to test with licensed consultants earlier than taking any funding choices.


Catch all of the Enterprise Information, Market Information, Breaking Information Occasions and Newest Information Updates on Reside Mint. Obtain The Mint Information App to get Each day Market Updates.
Extra Much less