The Senior Citizen Savings Scheme (SCSS) account is a savings tool sponsored by the government, designed for individuals aged 60 and above. Initiated by the Government of India in 2004, its primary goal is to offer a reliable and secure income stream to senior citizens during their post-retirement period.
Considered one of the most attractive savings schemes in India, the Senior Citizen Savings Scheme (SCSS) provides notably generous returns to its participants. As a government-backed investment initiative, it assures fixed returns quarterly. Individuals can access the benefits of the Senior Citizen Savings Scheme by enrolling through authorized banks and post offices in India. The scheme ensures investors a guaranteed annual return of 7.4%, disbursed in the form of a fixed monthly income. The interest rates are subject to periodic revisions by the Union Government, occurring every quarter.
Eligibility Under SCSS
The following people can open a bank or post office SCSS account:
- People older than sixty years old.
- Retired civilian workers who are under 60 years old but above 55. Nonetheless, the investment needs to be done no later than one month after receiving retirement benefits.
- Retired military personnel who are over 50 but under 60. Nonetheless, the investment needs to be done no later than one month after receiving retirement benefits.
- Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not permitted to open a SCSS.
Decoding the Key Features and Benefits of SCSS
To further clarify what a Senior Citizen Savings Scheme is, consider the features that are covered below:
- Quarterly Revision of Interest Rates
Every quarter, the Senior Citizen Savings Scheme’s interest rate is adjusted based on several variables, including market rates that are currently in effect and the rate of inflation.
After revision, rates may stay the same due to sluggish economic conditions or no major change in them.
- Fixed Income
The interest rate determined at the time of investment in the Senior Citizen Savings Scheme remains constant throughout the entire maturity period and remains unaffected by any subsequent alterations in later quarters.
- Minimum and Maximum Deposit
To qualify for the Senior Citizen Savings Scheme, eligible individuals must initiate the process by making a minimum deposit of Rs. 1,000. Simultaneously, the maximum deposit allowed is Rs. 30 Lakh or the amount received as a retirement benefit, whichever is lower. For instance, if an individual receives Rs. 10 Lakh as a retirement benefit, they can invest up to that specific amount in the scheme. This stipulation remains consistent whether the account is held individually or jointly. However, the option to open a joint account is exclusively available for spouses.
Furthermore, if an individual opts to have multiple accounts under the Senior Citizen Savings Scheme, the cumulative amount deposited across all such accounts must not surpass the established maximum limit.
- Maturity Tenure
The maturity period for the Senior Citizen Savings Scheme (SCSS) is initially set at 5 years. However, participants have the option to extend it for an additional 3 years, making the total period 8 years. Should an individual wish to extend the period by 3 years, they are required to submit Form B after completing it in full. Notably, this extension can only be availed once. Upon extension, the prevailing interest rates for that particular quarter will be applicable.
For example, consider an individual who deposited Rs. 7 Lakh in the SCSS in April 2012 when the interest rate was 9.3%. If she chooses to extend the scheme in April 2017, the interest rate applicable to her would be the one in effect during that quarter, which, in this case, stood at 7.4%.
- Premature Withdrawals and Account Closure
Individuals enrolled in the Senior Citizen Savings Scheme (SCSS) have the option to make premature withdrawals from their accounts starting one year after the account opening. However, should an individual decide to close their account before the completion of 2 years, a penalty of 1.5% of the deposited amount will be deducted.
Upon the completion of 2 years in the Senior Citizen Savings Scheme (SCSS), if an individual opts for account closure, a penalty of 1% of the deposited amount is applied. Notably, in the case of extended accounts, individuals have the flexibility to close their accounts after the first year without incurring any penalty.
- Quarterly Disbursal
Participants in the Senior Citizen Savings Scheme can anticipate receiving quarterly disbursements against their deposited amounts. Interest payments are scheduled to be credited to individual accounts on the first day of April, July, October, and January.
- Mode of Deposit
For deposits in the Senior Citizen Savings Scheme, individuals have the flexibility to deposit amounts below Rs. 1 Lakh in cash. However, if the deposit exceeds Rs. 1 Lakh, the payment must be made using a cheque.
- Nomination Facility
When opening an account under the Senior Citizen Savings Scheme, individuals have the option to register a nominee, and they can also choose to do so at a later date. In the unfortunate event of the account holder’s death, before the account matures, the nominated individual will be eligible to receive the due amount. The nomination process ensures a smooth transfer of benefits in such circumstances.
- Security of Capital
The SCSS (Senior Citizen Savings Scheme) is a government-endorsed scheme that provides a high level of security and guarantee for the capital invested. The backing of the government adds an extra layer of assurance for individuals participating in this savings scheme.
- Substantial Returns
The SCSS account has been recognized for offering its subscribers interest rates that are competitive and comparable to those provided by other savings schemes, including fixed deposits and recurring deposits. This parity in interest rates enhances the attractiveness of the SCSS as a viable investment option for individuals seeking stable returns.
How Does SCSS work?
Here is how an SCSS account works:
- Individuals can initiate the process of opening an SCSS (Senior Citizen Savings Scheme) account by depositing a minimum amount of Rs. 1,000, with the option to invest up to Rs. 30 lakhs in a single installment. This allows for flexibility in the investment amount within the specified range.
- The deposit amount for the SCSS (Senior Citizen Savings Scheme) is limited to the retirement benefits received by the individual. It is a requirement that this amount must be deposited in the SCSS account within one month from the date of receiving the retirement benefits from the employer. This restriction ensures timely and compliant contributions to the scheme.
- In the context of the SCSS (Senior Citizen Savings Scheme), retirement benefits refer to any payment owed to the account holder upon retirement, whether due to superannuation or other reasons. This encompasses various components such as provident fund dues, retirement or superannuation gratuity, commuted value of pension, leave encashment, savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme, and payments under a voluntary or special voluntary retirement scheme.
- If the deposit exceeds the ceiling amount specified for the SCSS (Senior Citizen Savings Scheme), the excess amount will be promptly refunded to the account holder. This ensures compliance with the prescribed limits and guarantees that any funds beyond the established threshold are returned without delay.
- Interest on the deposit made in the SCSS (Senior Citizen Savings Scheme) will be disbursed once every quarter. This means that account holders can anticipate receiving interest payments at regular intervals throughout the year, ensuring a predictable income stream from their investment in the scheme.
- Account holders in the SCSS (Senior Citizen Savings Scheme) have the convenience of drawing interest through two methods: auto credit into the savings account held at the same Post Office branch or through the Electronic Clearing Service (ECS).
- Individuals have the flexibility to prematurely close the SCSS (Senior Citizen Savings Scheme) account at any time after the date of opening. This feature provides account holders with the option to access their funds before the completion of the scheme’s tenure if needed.
- Upon maturity, the SCSS (Senior Citizen Savings Scheme) account can be extended for an additional period of 3 years from the date of maturity. This extension option allows account holders to continue their investment and receive benefits for an extended duration.
- Account holders have the option to extend the SCSS (Senior Citizen Savings Scheme) within 1 year from the date of maturity. This time frame provides individuals with a window to decide whether they wish to continue their investment in the scheme for an additional period of 3 years beyond the initial maturity date.
How to fill out the Post Office SCSS application form?
The SCSS application form is available for pickup at the post office branch or on India Post’s official website. Filling out the application is done as follows:
- On the form, type the name of the post office branch in the upper left corner.
- Enter the account number if you already have a savings account with the post office.
- Type the Post Office branch address under the “To” column.
- Incorporate the account holder’s picture.
- Enter the account holder’s name in the first blank field and select the ‘SCSS’ option from the list of choices.
- The options listed in the “Additional Facilities Available” section are only applicable if you are requesting to open a savings account, thus you are not required to choose any of them.
- After that, choose the sort of account holder: yourself, a minor with a guardian, or an unsound mind with a guardian.
- Choose the type of account: all or survivor, either or survivor, or single.
- Proceed to field number 2, where the deposit amount must be entered first in words and then in figures. Note the date and check number if you are presenting a check.
- Enter the account holder(s)’s personal information.
- At the end of the table, check the cells corresponding to the documents you have sent in as proof of delivery.
- Enter the information and check the SCSS declaration.
- All account holders’ signatures need to be added at the bottom of Page 1 and Page 2 of the form.
- Make mention of the nominee for the account as well as any pertinent information you have selected. Please add the signatures of all account holders to confirm the accuracy of this data.
How to open an SCSS account with the Post Office/Bank?
In India, a post office or any commercial or public bank can be used to open a SCSS account. Both have a similar process, which is described here.
- Pick up the SCSS application form at the closest authorized bank location.
- Complete the application form by entering all required information.
- Enclose the necessary paperwork.
- Present the application, and supporting documentation, and deposit funds to the bank employees.
- The SCSS account will be opened and the application processed by bank staff.
Documents required to open SCSS account
- Two photos the size of a passport
- Identity verification, such as a passport, Aadhar card, PAN card, or voter ID.
- Address verification, such as phone bills or an Aadhaar card.
- Age verification, such as a birth certificate, voter ID, PAN card, or senior citizen card.
- Every document needs to have a self-attestation.
What are the tax benefits under the SCSS account?
The Income Tax Act, 1961’s Section 80C allows people to deduct up to Rs. 1.5 lakh from their investments. TDS will be withheld if the interest amount exceeds Rs. 50,000 per year.
In summary, SCSS is an excellent program for senior citizens seeking a respectable return on a corpus investment without taking on any risk. The monthly income for each investor is claimed to be Rs. 20,500 at an 8.2% annual percentage rate and an investment of Rs. 30 lakh.
Frequently Asked Questions
Listed below are the frequently asked questions related to the SCSS account.
You are not currently able to open an online SCSS account. You are not able to open an account online with authorized banks or the Post Office. To open the account offline, please adhere to the aforementioned instructions.
By sending Form G to the post office and the necessary paperwork for account transfer to the bank of your choosing, you can transfer the SCSS account.
Indeed. You can designate your spouse as a joint account holder because you are over 60. Since you would be the primary account holder, opening the account won’t be impacted by your wife’s age.
The first account holder or depositor receives the entire balance in the SCSS account. Therefore, in this instance, adding a spouse as a joint account holder is irrelevant.
Yes, as long as both couples are above 60, they are eligible to open separate SCSS accounts.
Yes, if the interest reaches Rs. 50,000 annually, TDS is due. However, if you submit Form 15G/15H to the post office and the interest is less than Rs. 50,000 in a financial year, TDS will not be withheld.