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Senior Citizen Savings Scheme

SCSS Overview

Last Updated 01st Dec 2020

Senior Citizen Savings Scheme is a retirement benefits scheme for the senior citizens to get attractive returns along with tax benefits on their investments.

Maximum Investment ₹ 15 Lakh
Tenure Fixed 5 years with an extension of 3 years
Tax Benefits Under Sec 80 C, tax deduction upto ₹ 1.50 Lakh on the principal amount
Interest Rate 7.4% p.a
Eligibility Resident Senior Citizens above the age of 6o years or individuals aged between 55 years and 60 years who have opted for Voluntary Retirement Scheme

    What is a Senior Citizen Savings Scheme?

    Senior Citizens Saving Scheme or SCSS is a government-backed saving retirement benefits scheme for senior citizens above the age of 60 years. The individuals who are aged between 55 years and 60 years and have opted for Voluntary Retirement Scheme can also invest in SCSS. To invest in Senior Citizen Savings Scheme, senior citizens need to make a minimum investment of ₹ 1,000 and can invest upto ₹ 15 Lakh.

    Senior Citizens Savings Scheme (SCSS) Interest Rates

    The SCSS interest rates are revised by the Finance Ministry periodically and are also calculated and credited every quarter. For the first quarter of the financial year 2020-2021, the rate of interest applicable on SCSS is 7.4% p.a.

    Below are the interest rates offered on the Senior Citizen Savings Scheme for the last few quarters:

    Time Period SCSS Interest Rates
    1st July 2020 onwards 7.4% p.a
    1st April to 30th June 2020 7.4% p.a
    1st Jan to 31st March 2020 8.6% p.a
    1st Oct to 31st Dec 2019 8.6%p.a
    1st Jul to 30th Sep 2019 8.6% p.a
    1st Apr to 30th Jun 2019 8.7% p.a

    Features of the Senior Citizen Savings Scheme

    Here are some features of the Senior Citizens Saving Scheme.

    • Amount of Deposit: Senior Citizens need to invest a minimum of ₹ 1,000 in their SCSS accounts and can invest upto ₹ 15 Lakh in a financial year. In case the investor holds multiple accounts, then the cap on investment in the Senior Citizen Savings Scheme remains the same.
    • Tenure of Investment: Senior Citizens can invest in the Senior Citizens Saving Scheme for 5 years, which can further be extended for 3 years. In case, the investor extends the tenure of investment, he needs to submit duly filled Form B and the rate of interest is applicable as per the SCSS rate of the specified quarter.
    • Return on investment: SCSS interest rates remain fixed for the entire tenure of investment and do not change with the change in interest rates in the new quarter. Also, the rates are revised quarterly by the Finance ministry based on factors such as inflation level, economic conditions etc.
    • Premature closure of account: You cannot close your account prematurely as closing the account after one year attracts a penalty of 1.5%. If you close the account after the 2nd year of opening the account, then you will have to pay a penalty fee of 1% for premature closure.
    • Nomination facility: Senior Citizens can provide a nominee while opening an account in SCSS. In case, the account-holder dies before the maturity of investment tenure, the amount is paid to the nominee.
    • Mode of deposit: The funds in SCSS scheme can be deposited both through cash and cheque facility. For investment below ₹ 1 Lakh, the money can be deposited through cash, and you can deposit money through cheque if investment exceeds ₹ 1 Lakh.

    How to open an account under the Senior Citizen Savings Scheme?

    You can open an account in a Senior Citizen Savings Scheme in any post office or through authorised public sector/private sector bank by following the below-mentioned procedure.

    • Visit the nearest post office or bank branch.
    • Submit duly filled up Form A collected from Bank/Post office. You can also download the form from the official website of Indian Post Office or bank
    • Provide essential documents for identity proof, address proof and age proof.

    Documents Required For SCSS

    Investors need to submit a copy of the following documents with self-attestation.

    • Identity Proof: PAN card, Passport, Aadhar etc.
    • Address proof: Telephone bill, Aadhar card, PAN card etc.
    • Proof of age: Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or Registrar of Births and Deaths, Voter ID card, PAN card etc.
    • Passport size photographs.

    Eligibility for Senior Citizens Saving Schemes

    Individuals can invest in a Senior Citizen Saving Scheme if they meet the following eligibility criteria:

    • Resident Senior Citizens who are above the age of 60 years can invest in SCSS schemes.
    • In case, the individuals aged between 55 years and 60 years have opted for Voluntary Retirement Scheme they can also invest in SCSS. However, they must invest within 1 month of receiving the receipt of retirement.
    • Retired defence personnel are also eligible to invest in SCSS without any age limit, however with specific terms and conditions.
    • Members of HUF( Hindu Undivided Family), NRI (Non-Resident Individuals), POIs (Person of Indian Origin) are not entitled to invest in Senior Citizen Savings Scheme.

    Taxation on Senior Citizens Savings Scheme

    • Under Sec 80C of the Income Tax Act, you can get tax exemptions upto ₹ 1.50 Lakh on your investments.
    • However, there are no tax deductions on interest earned on the investment and interest is taxable as per the Income-tax slab rate.
    • Also, if the interest income from investments exceeds ₹ 50,000 in a financial year it is subject to the applicability of TDS ( Tax deducted at Source)

    Calculation of Interest under the Senior Citizens Savings Scheme

    The SCSS Interest is compounded quarterly and disbursed at every quarter on the first date of April, July, October, and January based on primary components such as the principal amount of deposit, Interest rate and the maturity period.

    Consider this example to understand better about SCSS Interest Calculation:

    If an investor has deposited ₹ 20 Lakh under SCSS on 1st April 2018 for a tenure of 5 years and the rate of interest rate was 8.30%.

    The total interest he will receive at the end of tenure:

    =Principal Amount* Rate of Interest * Tenure of investment

    = ₹ (2000000 * 8.3% * 5)

    = ₹ 8.30 Lakh

    The maturity amount= (Principal amount + interest)

    =₹ (2000000 +830000)

    =₹ 28.30 Lakh.

    List of banks offering SCSS Account

    Senior Citizens can open an SCSS account in any of the following public/private sector banks:

    • Allahabad Bank
    • Andhra bank
    • State Bank of India
    • Bank of Maharashtra
    • Bank of Baroda
    • Bank of India
    • Corporation Bank
    • Canara Bank
    • Central Bank of India
    • Syndicate Bank
    • UCO Bank
    • Union Bank of India
    • IDBI Bank
    • Indian Bank
    • Indian Overseas Bank
    • Punjab National Bank
    • United Bank of India

    FAQs

    How many SCSS accounts can I open?

    An individual can open multiple SCSS accounts singly or jointly with a spouse; however, you can invest more than ₹ 15 Lakh in all accounts in a financial year.

    Can we withdraw money from SCSS?

    You cannot withdraw the money from SCSS before the maturity period. However premature withdrawal of funds is allowed after 1st year of opening an account subject to penalty charges. If you close the account after the 1st and 2nd year of opening the account, then you will have to pay a penalty fee of 1.5% and 1% respectively.

    Is the senior citizen savings scheme tax-free?

    Under Sec 80C of the Income Tax Act, investors can tax deductions upto ₹ 1.50 Lakh lakhs on the principal amount. However, the interest earned in the senior citizen savings scheme is taxable as per your Income-tax slab.

    How safe is SCSS?

    SCSS or Senior Citizen Saving Scheme can be considered as one of the safest and reliable investment schemes as the government backs it and also the rate of interest on SCSS scheme is determined by the Finance ministry.

    What is the maximum amount one can deposit under SCSS?

    The maximum limit for investment in all accounts under SCSS is ₹ 15 Lakh.

    Can SCSS be closed prematurely?

    Yes, SCSS accounts can be closed prematurely; however, investors will have to pay a penalty charge of 1.5% and 1% if they close their account after 1st and 2nd year respectively.

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