Retirement Planning: SBI 5-Year FD or SCSS? Which investment can produce more quarterly income on Rs 9,50,000 deposit?
SBI 5-Year FD and SCSS are popular fixed-income investments. While SBI FD offers stable returns, SCSS provides higher quarterly payouts. Here's a detailed comparison of their returns on a Rs 9,50,000 investment.
A Fixed Deposit (FD) is a secure investment where banks offer a fixed interest rate for a predetermined tenure. Senior Citizens Savings Scheme (SCSS) is a government-backed scheme providing higher interest rates with quarterly payouts, designed for retirees. Both options ensure capital safety but differ in returns and liquidity. If you invest Rs 9,50,000, your earnings will vary significantly under SBI’s 5-year FD and SCSS. Let's compare their interest rates, quarterly income and overall maturity benefits.
(Disclaimer: This is an not investment advice. Do your own due diligence or consult an expert for financial planning)
SBI Fixed Deposit Interest Rates (2024)
- General Public: 3.50%-7.25% p.a.
- Senior Citizens: 4.00%-7.75% p.a.
- SBI Tax Saving FD: 6.50% (General) & 7.50% (Senior Citizens)
- NRIs can invest in NRO, NRE, RFC, and FCNR (B) FDs in multiple currencies.
Returns on SBI 5-year Fixed Deposit for Rs 9,50,000
- Invested Amount: Rs 9,50,000
- Total Interest Earned: Rs 3,61,399
- Maturity Value: Rs 13,11,399
Senior Citizens Savings Scheme (SCSS) – Interest Rates
- Current Rate (from Jan 1, 2024): 8.2% p.a.
- Interest Payable: Quarterly (April 1, July 1, Oct 1, Jan 1).
Eligibility Criteria for SCSS
- Individuals aged 60+ years.
- Retired Civilian Employees (55-60 years) (Investment within 1 month of retirement).
- Retired Defense Employees (50-60 years) (Investment within 1 month of retirement).
- Joint Account: Allowed only with a spouse.
SCSS investment limits & tax benefits
- Minimum Deposit: Rs 1,000
- Maximum Deposit: Rs 30 lakh
- Tax Benefit: Qualifies for Section 80C deduction.
Quarterly Income from SCSS on Rs 9,50,000 Investment
- Maturity Amount: Rs 13,39,500
- Quarterly Interest: Rs 19,475
- Total Interest Earned in 5 Years: Rs 3,89,500
SCSS premature withdrawal rules
- Before 1 year: No interest, amount recovered.
- 1-2 years: 1.5% penalty on principal.
- 2-5 years: 1% penalty on principal.
SCSS account closure & extension
- After 5 years: Can be closed with withdrawal application.
- Account Extension: Possible for 3 more years (must apply within 1 year of maturity).
Taxation on SCSS interest
- TDS Deduction: If total interest exceeds Rs 50,000/year.
- Form 15G/15H: Required for exemption if within limits.
SBI 5-Year FD vs SCSS
SBI FD: Rs 3,61,399 total interest (lower returns).
SCSS: Rs 3,89,500 total interest (higher quarterly income).
Best For: SCSS is better for retirees seeking regular income. SBI FD is safer for general investors