Why you should invest in Small Savings Schemes

The maximum deposit limit for SCSS has been increased from from 15 lakhs 30 million. Whereas for MIS it has been increased 4.5 Lakh onwards 9 lakhs and above for a single account from 9 lakhs 15 lakh for a joint account.

For the quarter ending March 31, the government is paying 8% interest on the SCSS scheme. Interest is paid quarterly under this scheme. However, in case of MIS, the government is offering 7.1% interest per annum, and this interest is paid monthly. Bankbazaar.com CEO Adil Shetty said the move will help senior citizens build a strong retirement corpus. SCSS comes with a lock-in period of five years. investment of 30 lakh will be available at 8% interest 60,000 every quarter. Government has increased the maximum deposit limit for MIS 4.5 Lakh onwards 9 lakhs for one account and from 9 lakhs 15 lakh for a joint account. So, by putting 15 lakh in MIS, investors can get monthly income 8,875 at the current 7.1% interest rate.

Any individual who is 60 years or more as on the date of opening the account or any individual who is 55 years of age and less than 60 years and who has retired on superannuation or under VRS can open an SCSS account. A person can open SCSS account either individually or jointly with his/her spouse. Investment under SCSS is eligible for the benefit of section 80C of the Act. Similarly, adult individuals who want to earn regular income every month with guaranteed returns at a fixed rate of interest can open an account in MIS scheme.

If you open MIS account in post office, you cannot withdraw from the scheme for at least 1 year from the date of deposit. Suppose the account is closed after one year and before three years from the date of opening the account, the post office will deduct an amount equal to 2% from the principal amount.

However, if an account is closed after three years and before five years from the date of opening the account, the post office will deduct an amount equal to 1% of the principal amount.

In case of SCSS scheme, the account can be prematurely closed at any point of time. If the account is closed before one year of opening, no interest will be paid to the investor. Therefore, if any interest is paid in the account before this, the same will be recovered from the principal amount. If the account is closed before two years, an amount equal to 1.5% of the principal will be deducted. If the account is closed after two years but before five years, an amount equal to 1% of the principal amount will be deducted.

A new small savings scheme, Mahila Samman Bachat Patra, has also been proposed in the budget for the benefit of women. It will be made available for two years till March 2025.

will provide deposit facility up to 2 lakh in the name of women or girls for a period of 2 years at a fixed interest rate of 7.5% and there will be an option for partial withdrawal.

Shetty said, “The rate of return is similar to the bank fixed deposit rate. Partial withdrawal facility facilitates liquidity. Bank savings rates are still giving low returns, at this point a 7.5% rate of return is a good rate of return to lock in. investment of 2 lakh for two years at 7.5% interest you will get the return 30,000-32,000 depending on how the interest is calculated.