Senior Citizen Saving Scheme (SCSS)

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.

What is the Senior Citizen Savings Scheme (SCSS)?

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.

What is a Senior Citizen Savings Scheme Account?

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.

SCSS Scheme Highlights

SCSS Interest Rate 

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.

How Does SCSS Work?

The Senior Citizen Savings Scheme is a well-liked fixed income investment option for people over 60. The major objective of the Senior Citizen Savings Scheme is to help seniors establish a reliable income after retirement. Because SCSS is a government-sponsored investment programme, it provides guaranteed quarterly returns. The Senior Citizen Savings Scheme is offered in India by accredited banks and post offices.

The SCSS account works in the following manner:

• Open a senior citizen savings account by investing anywhere from Rs.1,000 to Rs.30 lakhs in a single installment.

• The amount is to be deposited in the senior citizen savings account within 30 days from the date of retirement benefits from the organisation.

• Retirement benefits means any payment done to the individual on account of superannuation or retirement. This includes superannuation or retirement gratuity, provident fund dues,leave encashment, pension payable by the organisation upon retirement under the Employee’s Pension Scheme.

• If the deposit exceeds the cap amount, any amount that is over the prescribed limit will be refunded back to the individual immediately.

• The interest on the deposit amount is paid quarterly.

• The interest can be drawn via auto credit into the savings account held through ECS or at the post office branch.

• There is an option to close the account prematurely anytime.

• There is an option to also extend the account for 3 more years after the maturity date.

List of Banks Offering SCSS

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 

• Indian Overseas Bank

• IDBI Bank 

• Punjab National Bank 

• Indian Bank 

• UCO Bank 

• Union Bank of India 

• ICICI Bank 

Eligibility Criteria for Senior Citizen Savings Scheme

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.

Why Should You Opt for a Senior Citizen Savings Scheme?

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.

Features of Senior Citizen Savings Scheme

The following is a list of the Senior Citizen Savings Scheme's key characteristics:

• Maturity of SCSS: The Senior Citizen Savings Scheme will mature after five years. By making an application in the required forms within a year of the account's maturity, you can extend the maturity period by three years. After the account expires, though, the account could be withdrawn without incurring any fees.

• Nominations: After a Senior Citizen Savings Scheme account has been opened or during the process of opening the SCSS account, nominations can be added to the policy.

• Number of SCSS accounts: An account holder therefore may operate multiple accounts under the plan, provided that the total amount of deposits across all accounts, or ₹30 lakhs, does not exceed the legal maximum. Additionally, in a calendar month, no more than one account may be opened at the same deposit branch.

• Minimum and maximum amount: The Senior Citizen Savings Scheme account may only receive one deposit per day. The highest amount that can be invested is  ₹30 Lakhs, and it can be in multiples of ₹1,000. Cash can be used to pay deposits up to ₹1 Lakh, however sums over ₹1 Lakh have to be paid by check. When paying by check, the account will be opened on the day the check is released

• Transferring an account: It is possible to move an SCSS account from a post office to a bank, and vice versa. It is simple and hassle-free to open or transfer an SCSS account.

• Premature withdrawal: Premature withdrawal is permitted when a year has passed since the Senior Citizen Savings Scheme account was opened. Premature withdrawals after one year and two years, however, will incur fees of 1.5% and 1% of the total amount placed, respectively.

Documents Required to Apply for SCSS

While your PAN card is mandatory for opening an SCSS account, here is the list of other documents that will be needed.

For the purpose of proof of identity and address:

• Aadhaar Card

• Passport

• Driving licence 

• Voter ID card

• NREGA Job card signed by State Government officer

There are additional documentation that will be required while opening the SCSS account if you are less than 60 years

• An employer’s certificate providing the details of retirement on superannuation or otherwise. It should also include the details of retirement benefits and employment period 

• The proof of date will also be required to show the disbursal of retirement benefits 

SCSS Deposit Limits

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.

SCSS Maturity Period

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.

Steps to Open SCSS Account with a Bank

Here are the steps for creating an SCSS account with a bank:

• Step 1: Visit the bank branch where you hold a savings account or the one that is most convenient for you.

• Step 2: Fill out an application form after requesting one.

• Step 3: Submit the application form, along with any necessary supporting records, and the cash or cheque deposit amount to the bank's representatives.

• Step 4: Nominees may be added to the account.

Your application as well as the payment you receive will be processed by bank professionals. As soon as the payment is processed, the SCSS account would be created.

Steps to Fill SCSS Account Application Form for Post Office

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.

Tax Implications of SCSS

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.

Premature Withdrawal of SCSS

After the account's opening date, you have the choice of withdrawing your Senior Citizen Savings Scheme deposit, although doing so will incur penalties. Here are different conditions of withdrawals:

• If an account is closed within one year since the account was opened, no interest would be paid. Also, any interest that has been paid will be deducted from the account's principal amount.

• If you prematurely close your SCSS before two years have passed since the day your account was opened, 1.5% of your deposit will be charged as a penalty.

• If you prematurely close your SCSS  between 2 to 5 years after the account was opened, 1% of the SCSS scheme deposit will be charged as a penalty.

However, take notice that there are no fees if an extended account is cancelled more than a year following the account's extension.

What Happens in Case of the Account Holder's Demise?

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.

SCSS vs Fixed Deposit 

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