Senior Citizen Savings Scheme: 5 disadvantages of investing in SCSS

5 disadvantages of investing in SCSS: Senior Citizen Savings Scheme (SCSS) is a government-backed monetary financial savings scheme in India for senior residents. Any explicit individual above the age of 60 could make investments on this scheme, and earn a greater fee of curiosity than monetary establishment mounted deposits (FDs). While there are an a variety of benefits of investing in SCSS, senior residents should additionally know the disadvantages sooner than investing on this scheme. 

Senior Citizen Savings Scheme (SCSS) latest charges of curiosity

Banks and publish locations of labor present an fee of curiosity of 8.2% on the Senior Citizens’ Savings Scheme (SCSS). The govt had hiked the speed of curiosity for the April-June quarter from 8 per cent to eight.2 per cent. Once the funding is completed the speed of curiosity stays the an identical all via the tenure.

Senior Citizen Savings Scheme (SCSS) funding limit

Senior residents could make investments as a lot as ₹30 lakh on this scheme from April 1, up from ₹15 lakh sooner than, as stated by Finance Minister Nirmala Sitharaman in her Budget 2023 presentation. 

Vinit Khandare, CEO and Founder, MyFundBazaar listed out 5 disadvantages of investing in SCSS1) TDS on SCSS curiosity

The curiosity from SCSS deposits turns into taxable if it surpasses the ₹50,000 cap in a financial 12 months, not like PPF schemes the place all of the items is tax-free.

2) Fixed Interest Rate

While the SCSS account has develop to be a extremely attention-grabbing funding choice for senior residents on account of current fee of curiosity of 8.2%, individuals who created the account earlier at a lesser price are at an impediment. They may shut their earlier SCSS account and start a model new one to profit from the present extreme price. However, there are costs associated to prematurely canceling an SCSS account.

3) No curiosity on unclaimed curiosity earnings

Each quarter, householders of SCSS accounts ought to report their curiosity earnings. You won’t acquire any further curiosity on the money for many who don’t declare the curiosity that is due each quarter.

4) Limited Age Bracket

Only seniors over 60 years earlier are eligible to open a SCSS account. Employees throughout the private sector who wish to retire early cannot profit from the programme.

5) Fixed Tenure

Investments made in SCSS accounts have a 5-year lock-in interval. An further three years could also be added to the extension. Some depositors may uncover it troublesome to develop plans based on their targets or for a lot of who may wish to speculate merely for just a few years on account of lock-in time interval. Due to the lock-in interval and the exact penalty for premature withdrawal, certain patrons may in all probability experience a liquidity catastrophe.

Disclaimer: The views and options made above are these of explicit individual analysts, and by no means of Mint. We advise patrons to check with licensed consultants sooner than taking any funding picks.

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