SCSS vs MIS: Which can offer higher return on a Rs 11,00,000 investment for 5 years?
Compare SCSS and POMIS to determine which scheme offers better returns on a Rs 11 lakh investment for 5 years. Explore interest rates, tax benefits and maturity value insights.
The Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS) are secure investment options backed by the Government of India. SCSS is tailored for retirees, offering quarterly interest payouts and tax benefits under Section 80C, with an interest rate of 8.2% annually. POMIS, open to all, ensures fixed monthly interest at a 7.4% rate. This article explores some of the key benefits of the two investment avenues. Here are some of the key points to remember while picking between the two.
(Disclaimer: This is not an investment advice. Do your own due diligence or consult an expert for financial planning)
Senior Citizen Savings Scheme (SCSS) Overview
Eligibility:
- Open to individuals aged 60 and above.
- Retired civilian employees (55-60 years) and retired defense employees (50-60 years) can also invest within one month of receiving retirement benefits.
SCSS: Key Features
Deposit Limits:
- Minimum: Rs 1,000 (in multiples of Rs 1,000).
- Maximum: Rs 30 lakh per individual.
Interest Payout:
- 8.2% per annum, payable quarterly.
SCSS: Tax Benefits and Deductions
- Investments qualify for Section 80C benefits under the Income Tax Act.
- TDS Applicable: Deducted if annual interest exceeds Rs 50,000 unless Form 15G/15H is submitted.
SCSS: Premature Withdrawal and Extension
Premature Closure:
- Allowed anytime; penalties apply depending on the duration.
- No penalty for closure after one year in an extended account.
Account Extension:
- Extendable for 3 years post-maturity with the same interest rate.
SCSS Returns on Rs 11 Lakh for 5 Years
- Maturity Amount: Rs 15,51,000.
- Quarterly Interest: Rs 22,550.
- Total Interest Earned: Rs 4,51,000.
Post Office Monthly Income Scheme (POMIS) Overview
Eligibility:
- Open to individuals and minors (via guardians).
- Joint accounts can have up to three adults.
POMIS: Key Features
Deposit Limits:
Minimum: Rs 1,000.
Maximum: Rs 9 lakh (single) and Rs 15 lakh (joint).
Interest Payout:
7.4% per annum, payable monthly.
POMIS: Taxation and Withdrawal Rules
Taxation:
Interest is taxable.
Premature Closure:
Allowed after one year with penalties (2% deduction if closed before 3 years; 1% after 3 years).
POMIS Returns on Rs 11 Lakh for 5 Years
- Monthly Interest: Rs 6,783.
- Total Interest Earned: Rs 4,07,000.
- Maturity Value: Rs 15,07,000.
Which Offers Higher Returns?
- SCSS: Rs 15,51,000 maturity value with Rs 4,51,000 total interest.
- POMIS: Rs 15,07,000 maturity value with Rs 4,07,000 total interest.