With the proposed hike in deposit limit under Senior Citizen Savings Scheme (SCSS) in Budget 2023, senior citizen couples can ensure a combined higher monthly cash flow for themselves. At the current rate of 8% interest on SCSS deposits, the calculation shows that elderly couples can get up to Rs 40,000 monthly combined interest income by investing the full amount in their separate SCSS account.
Before getting into the calculation, let’s look at what the Budget 2023 proposed and what the rules say about SCSS account opening.
What Budget 2023 proposed
Finance Minister Nirmala Sitharaman proposed in her Budget 2023 speech that the investment limit under SCSS will be doubled to Rs 30 lakh. This enhanced deposit limit under SCSS is likely to be effective from April 1, 2023. However, an official notification in this regard is awaited.
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What goes into SCSS account opening
According to the Post Office website, any individual aged above 60 years of age can open an SCSS account. Retired Civilian Employees above 55 years of age and below 60 years of age, and Retired Defense Employees above Rs 50 years of age and below 60 years of age may also open the SCSS account.
There is an option to open the SCSS account either individually or jointly with the spouse. As per the existing rule, the current deposit limit under joint or individual accounts is Rs 15 lakh. This is likely to go up to Rs 30 lakh from the next Financial Year. What this means is that senior citizen couples can open their separate SCSS accounts and deposit Rs 30 lakh each in their respective accounts.
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How much senior citizen couples can earn?
SCSS account deposits mature in 5 years but subscribers get an opportunity to extend the account by another three years. The interest earned from SCSS deposits can be withdrawn quarterly.
The calculation shows that at the current rate of 8% interest, Rs 30 lakh deposit in the SCSS account will give a quarterly interest income of Rs 60,000 (which is equal to Rs 20,000 monthly income).
So if a senior citizen couple deposits Rs 30 lakh each in their separate SCSS accounts, they will be able to get a combined quarterly interest income of Rs 1,20,000 (Rs 60,000×2), which is equivalent to Rs 40,000 monthly income.
It should, however, be noted that the SCSS interest rate is revised on a quarterly basis by the Government. There is no guarantee that the current rate will continue to apply for the next five years. It may go up or down during the maturity tenure of SCSS deposits.
