Senior Citizen Saving Scheme (SCSS)

Senior Citizen Savings Scheme (SCSS) is a retirement benefit and corpus scheme by the Indian government. The minimum and maximum investment amount in this scheme is Rs. 1,000 and Rs. 15 lacs. The SCSS is for senior citizens over 60 years old and people who are between 55 years and 60 years of age, but have also opted for Voluntary Retirement Scheme and may invest in the SCSS. The investor earns a handsome interest on the principal amount. The current rate of interest is 7.4% per year. There are also tax benefits on the principal investment amount.

In this post, we will discuss about benefits of investing in Senior Citizen Savings Scheme, features, SCSS interest rates, calculation of interest earned, eligibility criteria, documents required, how to open SCSS account, applicable taxes and tax benefits, and FAQs.

What Are the Benefits of Investing in SCSS?

Senior citizens over 60 years old and individuals between 55 years and 60 years with Voluntary Retirement Scheme opted can earn a fixed and safe returns on the invested principal amount. The starting investment amount is as low as Rs. 1,000. As this savings scheme is backed by the government of India, it is trustable, and provided by certified banks as well as post offices in the country.

Features of the Senior Citizen Savings Scheme

Here are some features of SCSS:

• Deposit Amount: You can invest anywhere between Rs. 1,000 and Rs. 15 lacs for a financial year in your SCSS account. If you have multiple accounts, then the maximum cap on the scheme remains the same.
• Deposit Mode: You can deposit via a cheque or cash facility. You can deposit in cash, if the amount is less than Rs. 1 lac. But, if the investment amount is over this limit, then you have to deposit in cheque.
• Nomination: You can add a nominee when opening an SCSS account. If you pass away before the end of investment tenure, then the nominee will receive the due amount.
• SCSS Interest Rate: The rate of interest at present is 7.4% per annum, but this can change in the new quarter as per the directive of Finance Ministry. The rates are affected by the economical conditions, inflation, and other factors.
• Investment Tenure: You can invest in this savings scheme for a period of 5 years. However, you can choose to extend the tenure by 3 more years. But, if you extend the tenure, submit a duly filled Form B, detailing the interest rate for the specified quarter.
• Premature Closure: You must not opt for a premature closure, as a penalty of 1.5% is charged if you close the account after 1 year. In case of premature closure in the second year, a penalty of 1% is charged from the due amount.

Senior Citizens Savings Scheme (SCSS) Interest Rates

The Finance Ministry revises the rate of interest for SCSS at timely intervals. The interest is usually calculated and credited each quarter. As per latest news, the current quarter rate is 7.4% per annum. Below mentioned are the Senior Citizens Savings Scheme interest rates over the last few quarters:

Senior Citizens Savings Scheme Interest Calculation

The interest is quarterly compounded. The interest accumulated is also disbursed every quarter, starting from the first day of April, July, October, and January. The returns earned depend on the principal deposit amount, the applicable rate of interest, and maturity period.

• For instance, if you had invested Rs. 20 lacs on 1st April, 2018 for this scheme, on interest rate 8.30%, and tenure of 5 years, then the total interest earned is calculated below.
• Principal Amount* Interest Rate * Investment Tenure, which is Rs. (2000000 * 8.3% * 5).
• The resultant amount in the account will be Rs. 8.30 lacs.
• The maturity amount will be thus Interest Amount + Principal Amount, which is Rs. 20 lacs + Rs. 8.30 lacs.
• The final maturity amount will be Rs. 28.30 lacs.

Eligibility Criteria for SCSS

Here are the eligibility criteria for Senior Citizens Savings Scheme:

• Those who are resident Indians and over 60 years of age, can invest in SCSS.
• Retired defence personnel can also open an SCSS account without any age limit. But to avail this facility, there are a few conditions attached as well.
• The investment is allowed to people in the range of 55 years to 60 years, opted for Voluntary Retirement Scheme, and can invest in SCSS. But the investment must be within a month of getting the receipt of retirement.
• Those who cannot invest in Senior Citizen Savings Scheme include NRI (Non-Resident Individuals), HUF (Hindu Undivided Family), and POIs (Person of Indian Origin).

Documents Required for Senior Citizen Savings Scheme

You have to provide a copy of the mentioned documents, which should also be self-attested:

• Your recent passport-sized photographs.
• Identity proof (any one that is government-recognized) such as Passport, Aadhaar Card, PAN Card, etc.
• Address proof (any one that is government-recognized) such as PAN Card, Aadhaar Card, rental/ownership agreement, telephone bill, etc.
• Age proof (any of the government-recognized ones) ones such as Birth Certificate by Registrar of Births and Deaths or Corporation, Senior Citizen Card, Voter ID Card, etc.

How to Open an SCSS Account?

To open an account under the Senior Citizen Savings Scheme at any authorized public or private sector bank or post office, here are the steps to follow:

• Visit the nearest bank branch or post office.
• Duly fill, sign, and submit Form A available at the branch.
• This form is also available online on the official website of the service provider.
• Attach the required documents with the form, and submit it to the official personnel.

Tax Benefits for Senior Citizens Savings Scheme

Here is how taxation works for SCSS:

• You can avail tax exemption of up to Rs. 1.50 lacs under Section 80C of the Income Tax Act for a particular financial year where the investment is made.
• Remember, the tax benefit is only for the invested principal amount.
• No tax deductions are applicable on the earned interest. The interest income is taxable according to the income tax slab rate applicable on you.
• If the interest income is over Rs. 50,000 for a financial year, then Tax Deducted at Source is applicable.

Frequently Asked Questions about Senior Citizen Savings Scheme

Here are the SCSS FAQs: