Senior Citizen Savings Scheme: Everything You Need to Know
In 2004, the Indian government introduced the Senior Citizen Saving Scheme (SCSS), with the goal of providing senior individuals with a regular source of income. Senior citizens have found the scheme to be an appealing investment alternative. The plan generates a steady stream of fixed-income revenue.
Who is eligible to open an SCSS Account?
A person who is over the age of 60.
Retired civil servants between the ages of 55 and 60 are eligible with the condition that the investment is made within one month of receiving retirement benefits.
Retired defence personnel between the age group of 50 to 60 are eligible, with the proviso that the investment is made within one month of receiving retirement benefits.
NRIs and HUFs are ineligible to invest in the scheme.
An account can be opened in one’s own name or jointly with one’s spouse.
Only the first account holder is responsible for the entire deposit in a joint account.
Minimum & Maximum Limit of deposit in SCSS Account?
The minimum deposit in all SCSS accounts opened by an individual shall be Rs. 1000 and in multiples of 1000, with a maximum limit of Rs. 15 lakhs.
If an excess deposit is made in an SCSS account, then such an excess amount will be repaid to the depositor immediately.
Tenure of the Scheme & Extension
The money deposited in the scheme is for a tenure of 5 years.
You can also get your SCSS account extended by another 3 years from the date of maturity.
However, interest payable during the extension period shall be paid at the rate of interest in effect on the date of maturity, not the rate in effect at the time of initial deposit.
You can make an application for an extension of the SCSS account within one year of the maturity of the scheme.
Interest on SCSS
Interest will be paid quarterly, from the date of deposit to the 31st of March/30th of June/30th of September/31st of December.
For deposits made up to March 31st, 2022, the interest rate of 7.40% p.a. is payable to the investor.
The scheme holder have an option to withdraw interest through auto credit or ECS in a savings account, held at the same post office.
TDS on Interest: Interest is taxable if the total interest in all SCSS accounts in a financial year exceeds Rs. 50,000/-, and TDS at the statutory rate is deducted from the total interest paid.
Premature Closure of SCSS Account
You can close the SCSS account at any time after the date of opening the SCSS account.
|Time for pre-closure of SCSS||Result of Premature Withdrawal|
|Within one year of investing in Scheme||No interest shall be payable. Any interest if paid shall be recovered from the SCSS accountholder.|
|Between 1 to 2 years from the date of investing||The entire principal amount shall be refunded after deducting a 1.50% penalty from the principal.|
|Between 2 to 5 years from the date of investing||The entire principal amount shall be refunded after deducting a 1% penalty from the principal.|
Benefits of Investing in SCSS
The scheme provides a regular source of fixed income for senior citizens.
The scheme is backed by the Indian government. Thus, SCSS is the most secure and reliable investment option for senior citizens.
The scheme provides a higher interest rate.
In the year of deposit, a tax benefit of up to Rs. 1.50 lakhs is available under Section 80C of the Income Tax Act, 1961.
Where can you open an SCSS account?
An SCSS account can be opened at any authorized bank branch or post office branch. You can open an SCSS account online through the bank’s internet banking portal or mobile banking app if the bank allows it. The Post Office does not offer an online option for opening an SCSS account.
The article is for educational and informational purposes only and does not constitute any advice or a legal opinion. The article is based upon relevant laws and/or facts applicable at the time of publication and has been prepared with due accuracy and reliability. By the use of the said information, you agree that the “author/investbuddy.in” is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors, or any kind of omissions thereof.