FOR RISK-AVERSE INVEST-ORS, the government has proposed to introduce a one-time new small savings scheme, Mahila Samman Savings Certificate. It will offer deposit facility up to Rs 2 lakh in the name of women or girls for a tenor of two years at a fixed interest rate of 7.5% with partial withdrawal option. The scheme will be available up to March 2025.
The government has also proposed to raise the upper investment limit for Senior Citizen Savings Scheme (SCSS) from Rs 15 lakh to Rs 30 lakh and increase the maximum deposit limit for Monthly Income Account Scheme from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account.
SCSS to become more popular
The current interest rate offered on SCSS is 8%, which is higher by 50-75 basis points from that offered by banks to senior citizens. With higher investment limits, senior citizens can lock into this scheme now to earn higher returns. Interest is paid every quarter. Any number of accounts can be opened subject to maximum investment limit by adding balance in all accounts. An individual of 60 years or more can open the account. The lock-in period is for five years and can be extended only once for three years. Neeraj Agarwala, partner, Nangia Andersen LLP, says the additional amount will enable senior citizens to deposit higher sums in the scheme which will in turn help them earn higher interest.
Also, those above 55 years but below 60 years who have retired on superannuation or under VRS can open an account. However, the account will have to be opened within one month of receipt of retirement benefits and the deposit should not exceed the amount received after retirement. Joint account can be opened with a spouse only and the first depositor in the joint account is the investor.
Post Office Monthly Income Scheme Account
The five-year Post Office Monthly Income Scheme Account (MIS) is one of the popular investment tools for those seeking a regular income flow every month. The current interest rates offered on this scheme is 7.1% (January-March 2023). The interest is paid on completion of a month from the date of opening till maturity and if the interest paid every month is not claimed by the account holder then it will not earn any additional interest. For those who want to reinvest the monthly interest income, they can open a recurring deposit account for five years. An individual cannot withdraw before the expiry of one year from the date of deposit.