While you are heading towards your golden days it is always advisable to take moderate or low risk when you plan your portfolio. It is also important to have some replacement for your monthly salary that you were earning while you were in service.
For all senior citizens, Post Office offers two schemes – the first one is Senior Citizen Savings Scheme (SCSS) while the other the Post Office Monthly Income Scheme (POMIS). Senior Citizen Savings Scheme (SCSS) is a five year scheme which came into being in the second half of 2004. This scheme provides capital gains to senior citizens @ 9.3 percent per annum which is quite attractive.
Post Office Senior Citizens Savings Scheme should form a part of your portfolio as it gives you sure and secured returns and that too at attractive interest rates. Tax deduction comes handy. Even the minimum amount is quite manageable - you need to make a min investment of Rs 1000, which seems in reach.
This scheme not only provides safe and secured returns as there is no equity investment involved in it but also comes with tax benefits. Any investment up to Rs 1 Lakh that you have made in the scheme would qualify for receiving deduction under Section 80C of the Income Tax. Following are the features of this scheme.
Features of Post Office Savings Scheme for Senior Citizens
Age should be 60 years or more, and between 55 years to 60 years for individuals who have retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement.
Interest @ 9.3% per annum from the date of deposit on quarterly basis w.e.f. 01.04.2012
The Maturity period of this scheme is 5 years and can be extended for a further period of 3 years.
The Minimum amount that can be deposited in this scheme is Rs 1000 and multiples thereof
The Maximum amount that you can put in this scheme is Rs15 lakhs.
The account may be opened in your name as well as in joint names with your spouse.
Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
No withdrawal permitted before the expiry of a period of 5 years from the date of opening of the account.
TDS is deducted at source on interest if the interest amount is more than Rs 10,000/- per annum.
Interest can be automatically credited to savings account provided both the accounts stand in the same post office.
Premature closure is allowed after one year on deduction of 1.5% of the deposit and after 2 years on deduction of 1%. You may opt for premature closure after three years without any charge.
Nomination facility is available under the scheme.
Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.
No age limit for the retired personnel of Defence services provided they fulfill other specified conditions.
Documents Required for Post Office Senior Citizen Savings Scheme
Pan Card or/and if Pan is not allotted than copy of receipted application form for allotment of PAN.
Certificate from the employer as per sub-clause (ii) of clause (d) of rule 2.
Pay-in-Slip (Form-D) - duly filled and clearly mentioning the amount of deposit.
Age Proof – Self f attested copies of any of the following documents can be attached as age proof
iii)Voter Identity Card issued by the Election Commission of India
iv)Birth Certificate issued by the Municipal authority/ Gram Panchayat/District Office of the Registrar of Births and Deaths
vi)Date of birth certificate from the school last attended by the applicant or any other recognized educational institution or
vii)Driving License issued by the local licensing authority.
Note: You will be required to carry all the original documents for verification at the time of opening the account.
While planning your portfolio, apart from SCSS you may also try your hands on another scheme of post office which is also a secured investment option - Post office Monthly Income Scheme (POMIS).
Post of Monthly Income Scheme (POMIS) offers decent and safe capital gains. This scheme may be an ideal choice for you if you are looking for a monthly income after your retirement. This scheme is secure and risk free and ensures guaranteed return.
In this scheme you are required to investment a minimum of Rs 1500 or in multiple thereafter. You can hold maximum amount up to Rs. 4.50 lakhs and in case of a joint account Rs.9 lakhs is permissible.
The interest rate that you receive is @ 8.5 percent per annum payable w.e.f 01.12.2011. There is no tax rebate and tax deduction at source is also not applicable. Deposits are also exempt from wealth tax.
It gives you nomination facility and an auto credit facility of monthly interest to saving account if accounts are at the same post office. This scheme also brings an option of reinvesting your amount on maturity of your account.
If you wish to open an account in name of POMIS than this could be done in individual name or jointly in name of your spouse or three adults jointly, and even a minor can get enrolled in this scheme through a guardian.
In order to enhance your returns along with SCSS you may also go for POMIS and combine the returns from your POMIS with a recurring deposit. This would surely help you in churning extra capital gains for yourself and your family.
Megha Sharma works as a guest lecturer in Delhi. She holds an MBA & Doctorate from the UPTU. With extensive knowledge and experience in various financial products, she also works as a consultant in banking & finance domains wherein she offers advice to her clients in managing personal finance.
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