All that you need to know about Senior Citizens Savings Scheme

The Senior Citizens Saving Scheme (SCSS) is a government-backed scheme that provides guaranteed returns on a quarterly basis. It enables senior citizens to enjoy assured returns post-retirement.

The scheme initially allowed a maximum investment of Rs 15 lakhs. Since April 1, 2023, this threshold has been doubled to Rs 30 lakhs.

The current interest rate for the July to September quarter (Q2 FY 2023-24) is 8.2%, which is more than the Fixed Deposit rates being offered by most banks. The SCSS interest rates are fluid and can be revised by the government from time to time.

Eligibility

The following are eligible to invest in Senior Citizens Saving Scheme:

• Indian citizens above the age of 60 years
• Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation, provided they make the investment within three months of availing the retirement benefits
• Retired defence personnel above 50 years and below 60 years of age, provided they make the investment within three of availing the retirement benefits.
• Spouse of a state/central government employee who has passed away while on duty to invest the death compensation provided the deceased employee was 50 years of age or older.

Exclusions: Hindu Undivided Family (HUFs) and Non-resident Indians (NRIs) are not eligible to invest in Senior Citizen Savings Scheme.

Process of opening an SCSS account

A Senior Citizen can open an SCSS account by visiting a post office or at any branch of an authorised bank and filling up the application form. Some of the banks where an SCSS account can be opened are: State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, UCO Bank, Indian Bank, Central Bank of India, IDBI Bank, Punjab National Bank, Bank of India and Bank of Maharashtra. The lone private sector bank where SCSS account can be opened is ICICI bank.

The following documents are needed to open an SCSS deposit:

• KYC Document: It can be Aadhaar Card, Voter ID Card, PAN Card or Passport
• Utility Bills: It can be a Telephone bill or an Electricity bill
• Senior Citizen Card or Birth Certificate (Case Specific)
• Two passport-size photographs
• In SCSS, both the spouses can open single account and joint accounts with each other with the maximum deposit of upto Rs 30 lakhs in each account provided both are individually eligible to open the account.

In case of a joint account, the age of the first account holder is used to determine the eligibility and there is no age-limit for the second applicant. The whole amount of deposit in a joint account is attributable to the first account holder only.

Deposit Amount and Maturity

The minimum deposit allowed under the Senior Citizens Saving Scheme is Rs. 1,000 (and in multiples thereof).

The maximum deposit is Rs 30 lakhs.

The scheme provides for cash deposits. However, the maximum deposit that can be made in cash should not exceed Rs 1 lakh. All deposits beyond that amount should be through cheque or bank draft.

The minimum investment period is five years, and is calculated from the date of account opening.  After that, the investor has the option of extending the deposit in blocks of three years.

The deposit is renewed at the prevalent interest rate.

Penalty for premature closure

If the account is closed in the first year 1% of the deposit will be deducted.

Tax implications

• The principal amount invested in this scheme is eligible for deduction up to a limit of ₹1.5 lakhs under Section 80C of the Income Tax Act, 1961.
• The interest earned on the deposit is taxable depending upon an individual’s tax slab.
• TDS (Tax Deducted at Source) becomes applicable if the interest income exceeds ₹50,000 during a financial year.

Payment of Interest

The interest pay-out is quarterly. It is credited to the savings bank account of the investor on the first working day of April, July, October, and January.

 Read: Senior citizens can avail UP govt’s monthly pension scheme