Is this a superb time to lock cash in SCSS?

Rising inflation and falling rates of interest have been a double whammy for senior residents, particularly those that rely on fastened earnings devices resembling financial institution fastened deposits (FDs) for an everyday earnings as actual rates of interest have turned unfavourable. Real rate of interest is the same as rate of interest from deposits minus inflation.

Recently, the central authorities had rolled again its choice to scale back rates of interest on small financial savings schemes after a number of uproar.

Senior Citizens Savings Scheme (SCSS) is providing an rate of interest of seven.4%, which is round 1.2% larger than the charges supplied by banks on FDs focused at senior residents.

For occasion, State Bank of India (SBI) is providing an rate of interest of 6.2% underneath the particular FD We Care for senior residents. The public sector lender has prolonged the particular FD until 30 June.

Experts consider that SCSS is among the greatest choices for senior residents in search of common earnings. They can lock in cash within the scheme.

“The authorities has rolled again the order on the rate of interest lower on small financial savings schemes, however the urged modifications in rate of interest might come up within the subsequent quarter. Hence, these traders who’ve surplus funds with them and are advantageous with lock-in can take a look at investing proper now because the rate of interest for SCSS can be anticipated to scale back,” mentioned Harshad Chetanwala, a Sebi-registered funding adviser and co-founder of MyWealthGrowth.

The rate of interest on small financial savings schemes is revised quarterly, however in case you spend money on SCSS now, the speed will likely be locked in for the tenure of the scheme. Any subsequent lower is not going to influence your present investments.

“For senior residents, there usually are not many different choices accessible. If one wants common earnings, SCSS is among the greatest choices,” mentioned Chandan Singh Padiyar, a Sebi-registered funding adviser.

The most quantity {that a} senior citizen can spend money on SCSS is ₹15 lakh. The funding additionally qualifies for deduction underneath Section 80C.

However, similar to curiosity on financial institution FDs, the curiosity earned on the scheme is absolutely taxable as per the slab.

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