The Senior Citizen Savings Scheme is open to everyone who is above the age of sixty. It is an effective long-term savings option and offers alluring features, unmatched security and flexibility. Learn more about the Senior Citizen Savings Scheme (or SCSS) in this article, including the qualifications needed to participate, the benefits offered, and the application process.
The Senior Citizen Savings Scheme was established with the primary objective of providing senior citizens of India with a regular income once they turn 60. The following are some of the plan's primary advantages:
Tax benefits are offered
Investment in the programme is secure
Early withdrawal is permitted
The account can always be transferred throughout the country
High interest rates are offered
The Senior Citizen Savings Scheme provides eligible people (that is, those who are above the age of sixty) a long-term savings option and includes a number of security elements. This senior citizen scheme is accessible nationwide at post offices and accredited banks.
The Senior Citizen Savings Scheme account is a retirement-related and benefit focused account endorsed by the Government of India. The advantages of the Senior Citizen Savings Scheme account are available to senior citizens of India who invest a lump sum amount, either collectively or individually.
Rate of Interest |
8.0%/annum (F.Y 2022-2023) |
Tenor |
Five years (with a choice to extend it further for three more years) |
Minimum Amount That Can Be Invested |
Rs.1,000 |
Maximum Amount That Can Be Invested |
Rs.30 lakhs or the amount that is received upon retirement, whichever is lesser |
Benefits |
|
Penalty for Premature Withdrawal |
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The SCSS interest rate currently is 8% per annum. Compared to savings and fixed deposit accounts, the Senior Citizen Savings Scheme comes with substantial returns. Interest is due on 31 March, 30 June, 30 September, and 31 December in the first instance and on the deposit dates of 31 March, 30 June, 30 September, and 31 December thereafter. On the first working day in April, July, October, and January, interest is paid in quarters. However, only the post offices which have Core Banking capabilities can receive quarterly interest payments.
Quarterly interest is compounded and paid out on 1 April, 1 July, 1 October, and 1 January. The main factors that go into its computation are:
The deposit or principal amount
Interest rate
Maturity period
The interest rates for the SCSS have consistently been greater than those for any other deposit-linked financial instrument. They have occasionally decreased by as much as 0.9%, although they have also increased.
The following is a list of banks that offer Senior Citizen Savings Scheme:
Bank of Maharashtra
Bank of Baroda
Bank of India
Dena Bank
Canara Bank
Central Bank of India
Corporation Bank
State Bank of India
IDBI Bank
Punjab National Bank
Indian Bank
UCO Bank
Union Bank of India
The category of individuals listed below are qualified for Senior Citizen Savings Scheme:
Those who are 60 years of age or older
55-year-olds who have retired early due to superannuation or Voluntary Retirement Scheme (VRS) regulations
Retired members of the armed forces, provided they have met all other requirements
NRIs (non-resident Indians), PIOs (persons of Indian origin), and any HUF member are not eligible to create an account under the plan.
The major reasons why elderly citizens favour the senior citizen saving scheme as an investment option are listed below:
Guaranteed Returns: SCSS is one of the most dependable and safest investment options for senior citizens as it is a government-backed small savings scheme.
High Interest Rate: The senior citizen saving scheme interest rate is competitively high which makes the scheme one of the best investment options, especially when compared to more conventional methods of saving like FD and Savings Account.
Tax Benefit: Senior Citizen Savings Scheme is entitled for a tax deduction annually under Income Tax Act Section 80C of up to ₹1.5 lakhs.
Simple Investment Process: Investing in SCSS is a very simple process. In India, an SCSS account can be opened at any authorised bank or post office.
Quarterly Interest Payments: Senior Citizen Savings Scheme pays interest to account holders every three months, ensuring that your investment will grow over time. Every financial year, interest would be credited on the first day of April, July, October, and January.
If you qualify, you may invest in the Post Office Senior Citizen Savings Scheme with one large deposit.
The minimum deposit is ₹1,000 (and in multiples thereof)
The maximum deposit is ₹30 Lakhs, or the retirement benefit, whichever is less.
Cash deposits are permitted in SCSS accounts but are limited to sums under ₹1 Lakh. It is necessary to use a check or demand draft for deposits that are greater than ₹1 Lakh.
The general maturity period for an SCSS is 5 years.. After the account has matured, you have the option to extend it for additional three years. Currently, this extension option is only accessible once, and the request for an extension must be submitted within a year after the SCSS account's maturity.
Here are the steps for creating an SCSS account with a bank:
Visit the bank branch where you hold a savings account or the one that is most convenient for you.
Fill out an application form after requesting one.
Submit the application form, along with any necessary supporting records, and the cash or cheque deposit amount to the bank's representatives.
Nominees may be added to the account.
At any Indian Post office, you can open a Senior Citizen Savings Scheme account by following these steps:
Step 1: Visit your nearest post office.
Step 2: You must complete the SCSS application form.
Step 3: You then have to submit it with copies of your KYC credentials, which include proof of your identity, address, and age, as well as two current passport-size photos.
Investments made in SCSS are eligible for tax deductions. Here is how:
Under Income Tax Act of 1961 Section 80C, the principal amount deposited in the SCSS is entitled for a tax deduction of up to ₹1.5 Lakhs each year.
The tax rate that applies to the individual applies on the basis of interest earned on SCSS. If the total amount of interest earned for a fiscal year exceeds ₹50,000, Tax Deducted at Source (or TDS) is applicable to the earned interest. This cap on TDS deductions for SCSS investments will begin to apply in AY 2020–21.
The Senior Citizen Savings Scheme account would be closed and the entire maturity proceeds will be given to the designated legal heir or beneficiary in the event that the primary account holder passes away prior to the account's actual maturity. To expedite the Senior Citizen Savings Scheme account's closure for deceased claims, the legal heir or the nominee must submit a written application in the required format together with a copy of the death certificate.
Features |
SCSS scheme |
Tax Saver FD |
Interest rate |
8% |
6.5%-7.5% (For senior citizens) |
Premature Withdrawals |
Allowed (at any point after opening, but with penalties charged) |
Not allowed |
Tax Benefits (On Returns) |
Taxable |
Taxable |
Tax Benefits (On Investment) |
Yes |
Yes |
Maturity Period |
5 Years |
5 Years |
The primary applicant or depositor is given credit for the whole amount. In this situation, it is irrelevant if a spouse has been added as a joint account.
The maximum amount you can deposit under the SCSS scheme is ₹15 Lakhs.
There is no online application option for the SCSS scheme. The customer must complete the necessary paperwork in person at a post office or bank branch to start an SCSS account. The form, along with proof of KYC, age, identity, and address, as well as a cheque for the deposit amount, must be submitted.
The SCSS interest rate is 7.6% as on October-December 2022. It matures after five years and has a maximum eight-year extension period.
The SCSS scheme has a 7.6% interest rate.
Yes, under Income Tax Act of 1961 Section 80C, investments made in SCSS schemes are eligible for income tax deduction benefits.
Anyone over the age of 60 who has all the necessary documentation can open a senior citizen saving scheme account.
Yes, you may extend your SCSS account for an additional three years within a year of maturity.
An account may be moved from one deposit office to another by using Form G.
The maximum investment cap for this scheme has been revised from Rs.15 lakhs to Rs.30 lakhs now.