Savings for the future is always a good idea. What if you do not have any savings plan until you reach your retirement age? Well, worry not, there is a government savings scheme that has been specifically designed for senior citizens – Senior Citizen Savings Scheme (SCSS). This is one of the best government savings schemes for those who have reached 60 years of age and above. Learn more about this government scheme, including eligibility criteria, interest rates, tax benefits, and how to open an SCSS account.
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What is Senior Citizen Savings Scheme (SCSS)?
Senior Citizen Savings Scheme or SCSS is a government savings scheme to provide retirement benefits to senior citizens. It is truly a commendable attempt by the Indian government to provide financial freedom to senior citizens after retirement. Under this scheme, senior citizens can invest a lump sum individually or jointly and receive a regular pension along with tax benefits. The SCSS falls under the Post Office savings scheme.
Features of Senior Citizen Savings Scheme (SCSS)
| Senior Citizen Savings Scheme | Features |
| Total time period | 5 years |
| Min. investment | Rs. 1,000 |
| Max. investment | Rs. 30 lakhs |
| Interest rates | 8.2 % as on 01.01.2024 |
| Tax Benefits | Up to 1.5 lakhs |
| Premature withdrawal | Available |
Eligibility Criteria to Avail Senior Citizen Savings Scheme (SCSS)
The eligibility criteria to apply for the Senior Citizen Savings Scheme are simple. An individual above the age of 60 years can avail the benefits of this scheme. Besides, retired civilian employees above 55 years of age, retired defense employees above 50 years of age, and below 60 years of age can also apply. Individuals can open their account or jointly with a spouse only. In the joint account, the entire amount of the deposit will be considered as belonging to the first account holder only.
Documents Required to open a Senior Citizen Saving Account
There are some specific documents required for opening an SCSS account. Prepare these documents before going to the post office or the bank. Self-attested documents required for SCSS account opening are mentioned below:
- 2 Passport Size Photographs
- Identity proof: Aadhaar card / PAN card / Voter Id / Passport
- Proof of address: Telephone bill / Aadhaar card
- Proof of age: PAN card / Voter Id / Birth certificate / Senior citizen card
How much to Deposit in Senior Citizen Savings Account?
The minimum amount that can be deposited under this scheme is 1,000 and in multiple of 1,000. However, the upper limit is 30 lakhs. One can deposit in cash if the amount is less than 1 lakh, and if the deposit amount exceeds 1 lakh then cheque can be used. The good news is that investment under SCSS qualifies the benefit of Section 80C of the IT Act, 1961.
Interest rate on a Senior Citizen Savings Account
The interest rate on a Senior Citizen Savings Account is 8.2% per annum. And interest is paid quarterly i.e., every three months. Interests amount can be withdrawn through auto credit into post office savings account. If the total interest amount exceeds rupees 50 thousand in a financial year.
Premature Closing of a Senior Citizen Savings Account
What will happen if the account is prematurely closed? Well, if the account is closed before one year, then no interest will be payable. On the other hand, if the account is closed after one year and before two years then 1.5 % will be deducted from the invested amount. And if the account is closed after two years and before five years, an amount equal to 1% will be deducted from the invested amount.
SCSS Account Closure on Maturity
Once the maturity of five years arrive, account can be closed by submitting the required application form at the concerned post office. However, the account can further be extended for another 3 years from the date of maturity by submitting the application form.
FAQs (Frequently Asked Questions)
Q. Where can an individual open SCSS account?
A. An individual can open SCSS account either at the post office or the bank.
Q. How many SCSS account can be opened by an individual?
A. An individual can have multiple accounts for SCSS provided the cumulative amount deposited should not exceed 30 lakhs.
Q. Where can I apply for SCSS?
A. You can apply for an SCSS account either in the post office or the bank.
Q. If I open an account for SCSS, will TDS be applicable?
A. Well, if your interest amount is above 50,000 rupees then yes, TDS will be applicable. On the other hand, if your interest amount is below 50,000 rupees then TDS will not be deducted provided you have submitted 15G/15H to the bank or post office wherever your SCSS account is being operated.
Q. If I deposit, say, 5 lakhs in an SCSS account, how much I will get paid per quarterly?
A. At 8.2 percent interest rate, you will receive 10,250 rupees in every three months and a total of 41,000 in a year.
Q. What if the account holder dies before the maturity year of the SCSS, will the account still be continued?
A. Well, yes, the SCSS account will continue, however, there are two situations. In the first situation, if there is a joint account – the spouse of the joint account can continue till maturity year. On the other hand, if the account is individual, then the nominee can continue the account till its maturity, however, the interest rate will be equal to the PO savings account.