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SCSS Vs PPF: What Suits Best For Senior Citizens?

Senior Citizens Savings Scheme is specifically designed for catering to the needs of people in the age group of 60 years and above. Public Provident Fund, on the other hand, is one of the safest long-term and low-risk investment instruments that senior citizen investors find very attractive because of the benefits it offers.

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Amit Sethi
May 20, 2023
SCSS Vs PPF: What Suits Best For Senior Citizens?

Senior Citizens Savings Scheme (SCSS) and Public Provident Fund (PPF) are two small-saving schemes offered by the government. They are highly secured investment instruments as they are backed by the government.

As a senior citizen wanting to invest, you might be finding it difficult to choose whether to invest in SCSS or PPF. But don’t worry. Here, we will uncover various aspects of SCSS and PPF to help you make a well-informed decision.

What Is SCSS?

SCSS is a retirement-focused investment product that allows a senior citizen to invest a maximum amount of up to Rs 30 lakh. The investors receive quarterly interest for a maturity period of five years.

The investor also gets an option to extend the maturity by another three more years. There is a tax deduction benefit available on SCSS, which is restricted to Rs 1.5 lakh under Section 80C of the Income-tax Act, 1961.

It is important to note here that interest earned on SCSS is taxable in the hands of the investor and subject to a tax deduction at source (TDS) if the total interest in a financial year exceeds Rs 50,000.

At present, SCSS offers a rate of interest of 8.20 per cent per annum. There is a lock-in period of five years on SCSS investment, but one can make an early exit by paying the applicable penalties.

What Is PPF?

PPF is one of the most popular investment options when it comes to low-risk investment products available in the market.

At present, PPF offers a rate of interest of 7.10 per cent per annum. However, it could go up in the next revision.

The government revises the rate of interest on PPF each quarter.

PPF comes with EEE benefits i.e., it offers tax exemption on the interest earned on the investment amount, tax exemption on the maturity proceeds, and tax deduction benefit under Section 80C on the investment, up to Rs 1.5 lakh in a financial year.

One can also get a loan against the PPF investment after the third financial year until the sixth financial year. After the sixth financial year, the investor is allowed a partial withdrawal of funds from the accumulated corpus.

PPF is a very safe investment instrument for senior citizens who are looking for a long-term option without any liquidity concerns. They can enjoy tax benefits as well.

Factors SCSS PPF
Investment Tenure (Years) 5 15
Interest Per Annum (% 8.20 7.10
Tax Benefit Tax benefit u/s 80C.Interest income is taxable Tax benefit u/s 80C. Interest and maturity also tax exempt
Loan Benefit Not Allowed Allowed
Lock-In 5 years, but exit allowed subject to applicable penalty 15 years, but investors can make partial withdrawal subject to fulfilment of applicable condition
Interest Receipt Quarterly On Maturity

 

Conclusion

SCSS is an excellent choice for senior citizens who are looking for a regular flow of income by investing a lump sum amount. On the other hand, PPF is better for retirees who are looking for a stable maturity return and are not concerned about liquidity.

The author is a financial journalist

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