Senior Citizen Savings Scheme

• The deposit shall be opened with a minimum investment of Rs.1000 or any multiple amount of Rs.1000 not exceeding Rs.15 lakhs.
• The interest rate announced during the investing cycle remains fixed during the maturity period and is not influenced by adjustments in the later quarter.
• Premature withdrawals and closure of accounts - A person can withdraw early from his or her account under Senior Citizen Savings Scheme one year after the launch of the account.
• A person can opt to deposit his or her money in cash if the sum is less than Rs. 1 lakh, but has to pay in check if the amount exceeds Rs. 1 lakh.
• SCSS is a government-sponsored scheme and thus the capital deposited in it enjoys superlative security and assurances.
• The depositor may continue the account again for another term of three years after the period of maturity of five years.
• The deposit made pursuant to these rules shall be liable to interest every quarter as directed by the Government.
• If the interest due on a quarterly basis is not asserted by the account holder, that interest shall not accrue any extra interest.
• The cumulative value of the deposit in a joint account is only due to the first account holder.
• Both the partners can open a separate account and a joint account with each other.
• One person or more than one person can be nominated by the depositor. Nominations made by the depositor can be cancelled or changed.
• The deposit made at the time of the opening of the account shall be deposited on or after the end of five years or at the end of eight years if the account has been extended from the date of the opening of the account.

What are the benefits of opening a Senior Citizen Savings Account?

• Secure and efficient: This is an Indian government-sponsored investment scheme and is thus known to be one of the best and most reliable investment opportunities.
• Quick and fast process: The process of opening a SCSS account is simple and can be opened at any registered bank or post office in India. It is also transferable to India.
• Good returns: At 7.4%, the return on investment is really good relative to investments or an FD account.
• Tax benefits: Tax deductions of up to Rs.1.5 lakh can be sought under Section 80C of the Indian Tax Act, 1961.
• Flexible: The duration of this investment scheme is flexible for an overall duration of 5 years, which can be extended by up to 3 additional years.

How to open a Senior Citizen Savings Account?

The Senior Citizen Savings Scheme account can be opened at your nearest public or private sector bank, or at the nearest post office. It is very simple to open this account.

• Fill the application form for Senior Citizen Savings Scheme
• Submit your PAN Card and proof of address. You will also need to submit passport size photographs as requested.
• Deposit amount below Rs.1 lakh can be deposited as cash but amount above Rs.1 lakh should be deposited by cheque
• Upon successful submission of all these documents, your SCSS account shall be opened and you will get a passbook

What is the eligibility criteria to open a Senior Citizen Savings Account?

• A person may open an account in an individual capacity or in conjunction with the spouse.
• NRI's & Hindu Undivided Families are not qualified to open an account in compliance with these laws.
• A person who has reached the age of 60 years and over.
• An individual who has crossed the age of 55 years or more but less than 60 years and who has aged on a superannuation basis or otherwise on the day of the opening of an account.
• Retired Defence Forces employees after attaining the age of fifty years.

Minimum & Maximum Investment Amount for SCSS

A person can invest a maximum amount of Rs.15 lakhs, either independently or jointly in a SCSS account. The investments should be made in multiples of Rs. 1,000. The sum spent in the plan cannot exceed the amount of money earned at the time of retirement. As a result, a person may either spend Rs.15 lakh or the sum earned as a retirement bonus, whichever is lower. The account can be opened by cash for less than Rs.1 lakh deposits and by cheque for more than Rs.1 lakh.

Interest rate on SCSS Account

Here are the historical interest rates offered on the Senior Citizens’ Savings Scheme:

Premature Closure and Withdrawal of the Deposit

A person can withdraw early from his or her account under Senior Citizen Savings Scheme one year after the creation of the account.

If a person closes his or her account by the end of 2 years, 1.5% of the deposited balance will be deducted as a penalty. When the closing of the account takes place at the expiration of 2 years, 1% of the balance deposited shall be levied as a penalty. In the case of extended accounts, a person can close his or her account after the first year without incurring any penalty. However, if the creditor has died before the maturity of his account, no penalty will be applied.

Interest calculation under the Senior Citizen Savings Scheme

Interest is compounded quarterly and paid out on a quarterly basis on the first dates of April, July, October and January. The primary components used for its calculation are –

• Principal deposit amount
• Interest rate fixed for that quarter
• Maturity period

The duration of maturity is constant, while the other two elements are unpredictable. The interest rate at which the individual invested is to be considered for interest calculation.

What happens once the Senior Citizen’s Savings Scheme matures?

Deposits made under the Senior Citizens' Savings Scheme shall mature after five years from the date of opening of the account. However, the account holder has the possibility of continuing the plan for a further 3 years after it has matured. This extension option is currently valid only once and the proposal for an extension must be submitted within 1 year of the maturity of the SCSS account.

Tax Implications of Senior Citizens Savings Scheme

Investments made in the Senior Citizen Savings Scheme account are liable for income tax deduction benefits of up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act, 1961.

The interest earned through SCSS is completely taxable. In the event that the amount of interest received is greater than Rs. 50,000 for a tax purposes, TDS shall be deducted on the interest earned. This cap for the TDS deduction for SCSS assets shall extend from AY 2020-21 onwards.

Senior Citizens Savings Scheme FAQs