What is Senior Citizen Savings Scheme?
Senior Citizen Savings Scheme is a government-backed retirement model wherein individuals above the age of 60 can invest and generate regular income with tax benefits.
It was launched in 2004 with an objective to reduce elderly people’s dependency and offer other attractive benefits to make life flow easier after retirement.
Table of Contents
Why Senior Citizen Savings Scheme?
- The scheme offers various offers to senior citizens like high interest rates, government assured safety, and tax benefits.
- The procedure is hassle free, allowing easy open and transfer of accounts.
- The tenure can be extended on the wish of the account holder.
- It is an overall simple and flexible scheme.
Who can Invest in Senior Citizen Savings Scheme (SCSS)?
- Any Indian individual above the age of 60 years is eligible to register under this scheme.
- Joint accounts can be opened with spouses only.
- Retired civilians above 55 years and below 60 years of age can also open a Senior Citizen Savings account, only if the investment is made within 1 month of receipt of retirement benefits.
- Retired Defence Employees above 50 years and below 60 years of age are eligible if the investment is made within 1 month of receipt of retirement benefits.
- NRIs and Hindu Undivided Families are not allowed to have accounts under this scheme.
Senior Citizen Savings Scheme Features
- Amount: The minimum amount of deposit has to be at least ₹1000 and the maximum shall not exceed ₹15 lakhs.
- Accounts: An individual can open any number of accounts or a joint account with a spouse only.
- Transfer: The opening and transfer of accounts is pretty simple. They can easily be transferred from one bank to another post office or vice versa across the country.
- Maturity: The tenure of this scheme is 5 years but the citizens are allowed to extend this for 3 more years by submitting an application.
- Withdrawal: The lock in period is for 5 years and any withdrawal before that will be charged a penalty of 1-1.5%.
- Interest: The interest rates are pretty high and are paid on a quarterly basis. Till maturity, the same interest rate will be paid as it was on the date of registration.
Tax Implications of Senior Citizen Savings Scheme
- The Senior Citizen Savings scheme for tax deductions under section 80C of Income Tax Act, 1961 for investments of not more than ₹150,000.
- In cases when the interest earned is more than ₹10,000 annually, then the investment becomes eligible for taxes.
Process to open a Senior Citizens Savings Scheme account
Till date, Senior Citizen Savings Scheme does not allow online opening of accounts. The process to be followed is given below:
Step 1: Visit the nearest post office or an authorized bank branch.
Step 2: Fill the registration form and KYC details along with the required documents.
Step 3: Deposit a cheque for your first investment and add nominees if you wish to.
FAQ Section
What is the maximum amount one can deposit under Senior Citizen Savings Scheme?
The limit on the maximum amount to be deposited is 15 lakhs.
What is the current rate of Senior Citizen Savings Scheme?
The current interest rate offered to the subscribers under this scheme is 7.4%.
Senior Citizen Savings Scheme maturity period.
The maturity period is 5 years but it can be extended once for a period of 3 years.
Premature withdrawal of Senior Citizen Savings Scheme.
Premature withdrawal under the scheme is allowed. A charge of 1.5% and 1% will be deducted on the total amount after year 1 and 2 respectively.
