Tuesday, August 23, 2011

Senior Citizen Saving Scheme 2004


The Senior Citizen Saving Scheme 2004 had been introduced by the Government of India for the benefit of senior citizens who have crossed the age of 60 years. However, under some circumstances the people above 55 years of age are also eligible to enjoy the benefits of this scheme. These prerequisites include voluntary retirement of the beneficiary before making the investment, a maximum time limit of three months to make the investment after the retirement and a certificate from the employer stating the details about the employment and retirement of the beneficiary. The scheme is not allowed for Non Resident Indians (NRIs) and Hindu Undivided Families.

Investment 
The investment under the Senior Citizens Savings Scheme can be made in any Post Office, although the beneficiary has to open an account for making the investment. Also, one account can hold only one deposit from a beneficiary, which indicates multiple accounts are mandatory to be opened for making multiple deposits under the scheme. The deposits can be made only in the multiples of Rs. 1,000 and the maximum limit for a deposit has been restricted to Rs. 15,00,000. One important condition is that if a person opens multiple accounts for making more than one deposits, the total amount of all the deposits should not cross the maximum limit of Rs. 15,00,000. Also, a beneficiary can't open two or more accounts in a single Post Office during the same month.

Interest and Nomination 
The Senior Citizen Saving Scheme 2004 offers an interest rate of 9 percent per annum, which will be payable on a quarterly basis on the 31st of March, 30th of June, 30th of September and 31st of December of every year. The interest earned upon the savings is fully taxable, and the tax is deducted at the source itself. The scheme offers nomination facility so that in case of death of the beneficiary, the funds might be paid to the nominee of the beneficiary.

Maturity and Withdrawals 
The tenure of Senior Citizen Saving Scheme 2004 is 5 years, which can be further extended for a period of 3 years by making an application to that effect. After a period of 1 year, the beneficiary can withdraw his or her amount with some conditions, but a penalty between 1% and 1.5% of the deposit is deducted before the withdrawal is made.

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