SCSS investment limit -------------------------
Senior citizens can invest up to ₹30 lakh in this scheme from April 1, up from ₹15 lakh before, as stated by Finance Minister Nirmala Sitharaman in her Budget 2023 presentation.
1) TDS on SCSS interest --------------------------
If the interest accrued in the SCSS account surpasses the threshold limit of ₹50,000 in a financial year, it will be subject to TDS.
The interest from SCSS deposits becomes taxable if it surpasses the ₹50,000 cap in a financial year, unlike PPF schemes where everything is tax-free,
2) Fixed Interest Rate ---------------------------------
While the SCSS account has become a very appealing investment choice for senior citizens due to the current interest rate of 8.2%, individuals who created the account earlier at a lesser rate are at a disadvantage.
They might close their previous SCSS account and start a new one to take advantage of the present high rate. However, there are fees associated with prematurely canceling an SCSS account.
3) No interest on unclaimed interest income -------------------------------------
Each quarter, owners of SCSS accounts must report their interest earnings. You won't receive any further interest on the money if you don't claim the interest that is due each quarter.
4) Limited Age Bracket ------------------------
Only seniors over 60 years old are eligible to open an SCSS account, which means that private sector employees who want to retire early cannot avail the benefit of the scheme, said Archit Gupta
5) Fixed Tenure ---------------------
Investments made in SCSS accounts have a 5-year lock-in period. An additional three years can be added to the extension.
Some depositors may find it challenging to develop plans based on their goals or for those who may desire to invest simply for a couple of years due to the lock-in term.
Due to the lock-in period and the specific penalty for premature withdrawal, certain investors may potentially experience a liquidity crisis, said Vinit Khandare.
Disclaimer: We advise permission to check the certificates before taking any investment decision.