NSC vs SCSS: Both the Senior Citizen Savings Scheme (SCSS) and National Savings Certificates (NSC) offered by the post office can be used by senior citizens to protect their hard-earned money
NSC vs SCSS: Both the Senior Citizen Savings Scheme (SCSS) and National Savings Certificates (NSC) offered by the post office can be used by senior citizens to protect their hard-earned money and support their post-retirement lives. However, both schemes have their own distinct advantages and limitations that should be looked at before investing. Here is a comparison of both schemes on six key points for the benefit of senior citizens.
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NSC vs SCSS: Interest rate
The current interest rate for deposits in an NSC account is 7.7% whereas the SCSS scheme is offering 8.2% interest to senior citizens.
NSC vs SCSS: Deposit Limit
There is no maximum limit for deposits in NSC. This means you can deposit as much as you want in an NSC account. However, the maximum deposit limit under the SCSS account is Rs 30 lakh from FY 2023-24.
Number of accounts: There is no limit on the number of accounts that can be opened under both NSC and SCSS schemes. However, the total deposits in all SCSS accounts of a person should not be more than Rs 30 lakh. There is no such limit in the case of NSC.
NSC vs SCSS: Taxation
Deposits up to Rs 1.5 lakh in a year under both NSC and SCSS schemes qualify for deduction under Section 80C of the Income Tax Act. However, interest income earned from both schemes are not fully tax-free.
NSC vs SCSS: Withdrawal/closure
The amount along with interest from NSC account can be withdrawn after 5 years. Premature closure under the NSC scheme is allowed but only in the following circumstances:
- On the death of a single account, or any or all the account holders in a joint account
- On forfeiture by a pledgee being a Gazetted officer.
- On order by court.
In the case of SCSS, the interest income is paid to the account holder on a quarterly basis. Premature closure of the SCSS account attracts some penalties (read details here). This account can be closed after 5 years or extended for another 3 years.
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Account Maturity
Both NSC and SCSS accounts mature in 5 years. After the completion of 5 years, you can reinvest in a new NSC account. However, the same SCSS account can be extended for another three years.
Maximum interest income
As there is no limit on the amount that can be deposited in an NSC account, the interest income will depend on the total amount invested. For instance, if you deposit Rs 1 lakh today in an NSC account, you will earn approx Rs 44,903 as interest after 5 years.
In the SCSS account, the maximum deposit of Rs 30 lakh can give Rs 61,500 as quarterly interest income to a senior citizen.
