Introduction

The Senior Citizen Savings Scheme is a savings scheme by the government for the benefit of senior citizens. This scheme was initiated in 2004, and its primary goal is to give financial assistance to retired individuals by ensuring that they have some regular income flow. It also provides high safety and tax-saving benefits to Senior Citizens. Various banks and post offices offer this scheme across India.

The current rate of interest that is offered on the SCSS account for the last quarter of the 2019-2020 financial year (January to March) is 8.6% per annum. The rate of interest is subject to change periodically and is revised every three months by the Ministry of Finance. The interest on the amount in an SCSS account is calculated and received quarterly.

Who is Eligible to Avail SCSS?

The following criteria must be fulfilled to reap the benefits of the Senior Citizen Savings Scheme.

  1. The individual has to be a citizen of India. Non-residential Indians and persons of Indian origin do not qualify to benefit from this scheme. Members of Hindu Undivided Family do not qualify for this either.
  2. Since this is a saving scheme for senior citizens, any citizen of India is eligible if he or she is aged 6o years or above.  But, this age bar is relaxed in a few cases-

a). If a person has opted for Voluntary Retirement Scheme (VRS) or Superannuation, and he or she is in the 55-60 age bracket, the retiree can avail this scheme if he or she applies within a month of gaining the perks of retirement.

  1. If retired defence personnel fulfil other conditions, they are eligible to avail this scheme. There is no age limit in this case.

Deposit Limits for SCSS Scheme

The minimum amount you have to deposit to open an SCSS account is Rs. 1000. Deposits greater than that should be made in multiples of Rs 1000. The maximum amount you can contribute to your SCSS account is Rs 15 lakh.

You can deposit the money in your SCSS account in cash.  This is the case for deposits lower than Rs 1 lakh. If you wish to deposit an amount higher than that this, you are required to do it through a cheque or demand draft.

How to Open an SCSS Account

As mentioned earlier, public sector banks and post offices offer the facility to open a Senior Citizens Savings Scheme account.

Opening SCSS account at the post office

SCSS account can be opened at all post offices in India. You need to link a savings account at the post office where you open the account so that the interest you earn might be credited to it automatically. The vast reach of the India Post makes sure that Indians across the country have the option of the SCSS account accessible to them.

Opening SCSS account at a bank

Besides post offices, selected public or private sector banks offer customers the opportunity to open a Senior Citizen’s Savings Scheme account. Opening an SCSS account at one of these authorized banks provides the following benefits-

  1. The interest that is accumulated will be directly credited into the savings account of the depositor that is held with that bank branch
  2. The standard account statements will be sent to the depositor by way of post or email.
  3. Phone banking services provide available customer service 24*7

If you are a senior citizen who wishes to complete the SCSS registration at a bank, there is an account opening procedure that you will be required to follow.

Filling up the Application Form for Senior Citizens Savings Scheme

At present, the option to open an SCSS account online is not available. So, you can download the form, take a print out and fill it out. Then you can submit the filled out form at the post office or bank along with the required documents.

You are required to provide some vital information in the application form at the time of opening your account. Fill out the following details-

  1. Applicant’s name and PAN
  2. Name of the father/mother/husband/wife of the primary applicant
  3. In case you wish to open a joint SCSS account with your spouse, the name, age, and address of your spouse will have to be stated.
  4. If you are depositing the amount using a cheque or demand draft, details of that will have to be mentioned.
  5. Name, age, and address of the nominee. If there is more than one nominee, you need to specify the individual share of each one of them.

Can You Withdraw the SCSS Account Deposit Prematurely?

The deposit you make when you open the account is payable on or after 5 years, or after 8, if the account was extended, as calculated from the date the account was opened. In case you wish to withdraw the amount prematurely, you are allowed to do so, but there is a penalty applicable. This penalty is calculated on time elapsed between the date of account opening and withdrawal.

  1. A penalty of 1.5% of the deposit amount is deducted if you wish to exit the scheme before 2 years have completed.
  2. 1% is charged as a penalty if the exit occurs after that, and before the completion of 5 years.

Benefits of Investing in SCSS

There are certain benefits the SCSS scheme offers to senior citizens-

  1. Since SCSS is a government scheme, it comes with all the protection and security associated with such government-backed programmes.
  2. At present, the current interest rate is 6%per annum, which is quite high. So, this provides greater returns that a majority of tax-saving components under Sector 80C.
  3. Since the maturity term is moderately long and can be further extended too, it encourages senior citizens to keep this as a long term investment plan which keeps them financially secure.
  4. The investments you make in a Senior Citizen Tax-Saving Schemeare subject to tax deductions of up to Rs. 1.5 lakh in any financial year, under section 80C of the 1961 Income Tax Act.
  5. Since you can invest any amount in between Rs 1000 and Rs 15 lakhs (in multiples of Rs 1000), it offers you great flexibility. But, you can make a one-time lump sum investment only.
  6. In case of emergencies, you have the option to make a withdrawal prematurely after the applicable penalty is deducted.
  7. The scheme is very widely available, thus making it accessible to citizens across the country.
  8. You can open a joint SCSS account with your spouse too. The maximum amount is Rs 15 lakh in this case also, and joint accounts can be opened only with spouses. In case of a joint SCSS account, it is required that the age of the first depositor be above 60 years. No such rule applies to the second applicant.
  9. You can select one or more nominees too. Nominations you make can also be altered or cancelled.

Conclusion

The SCSS scheme is an excellent opportunity for citizens above the age of 60 to make money and save tax. It offers a saving solution that is long term, secure and effective. Since the government sponsors it, it also comes with the added perks associated with such schemes. This is the ideal Senior citizen tax saving scheme and perfect choice of investment. The Senior Citizen Savings Scheme will help you make your future a more secure one.