Senior Citizen Savings Scheme (SCSS) – A Scheme Designed To Help Senior Citizens Save Money

In this article, you will learn about the Senior Citizens Savings Scheme (SCSS), eligibility criteria, interest rate, benefits, SCSS application form and more related to the program.

Investing in a Senior Citizen Savings Scheme (SCSS) is a preferred option for people over 60 years of age. The aim of the scheme is to ensure a regular flow of income post retirement for senior citizens. In India, the Senior Citizen Savings Scheme provides guaranteed returns on a quarterly basis since it is a government-backed investment scheme.

Highlights of the Senior Citizen Savings Scheme (SCSS)
The interest rate is 7.40% per annum (Q2 FY 2022-23)
Duration: Five years (with an option of extending it for three more years)
The minimum investment amount is Rs. 1,000
The maximum investment amount is Rs. 15 lakh, or retirement income, whichever is less
These benefits are:
  • Reliable and safe investment
  • Comparatively high returns to FDs and savings accounts
  • Tax benefit up to Rs. 1.5 Lakh
Premature Withdrawal Penalty
  • 1.5% of the deposited amount if withdrawn before the end of the two-year period
  • 1% of the amount on withdrawing after the completion of 2 years

Interest Rates for SCSS

The interest rate for Senior Citizen Savings Schemes (SCSS) for the second quarter (July-September) of FY 2022-23 is 7.4% p.a., one of the highest rates offered by fixed income small savings schemes.

Interest rates are reviewed and changed periodically in SCSS. Interest is also calculated and credited quarterly.

For Senior Citizen Savings Scheme, the following interest rates are historical:

Time Period Interest Rate (% annually)
April to June (Q1 FY 2022-23) 7.4
Jan to Mar (Q4 FY 2021-22) 7.4
Oct to Dec (Q3 FY 2021-22) 7.4
Jul to Sep (Q2 FY 2021-22) 7.4
April to June (Q1 FY 2021-22) 7.4
Jan to March 2021 (Q4 FY 2020-21) 7.4
Oct to Dec 2020 (Q3 FY 2020-21) 7.4
Jul to Sep 2020 (Q2 FY 2020-21) 7.4
Apr to Jun 2020 (Q1 FY 2020-21) 7.4
Jan to March (Q4 FY 2019-20) 8.6
Oct to Dec 2019 (Q3 FY 2019-20) 8.6
Jul to Sep 2019 (Q2 FY 2019-20) 8.6
Apr to Jun 2019 (Q1 FY 2019-20) 8.7
Jan to March 2019 (Q4 FY 2018-19) 8.7
Oct to Dec 2018 (Q3 FY 2018-19) 8.7
Jul to Sep 2018 (Q2 FY 2018-19) 8.3
Apr to Jun 2018 (Q1 FY 2018-19) 8.3
Jan to March 2018 (Q4 FY 2017-18) 8.3
Oct to Dec 2017 (Q3 FY 2017-18) 8.3
Jul to Sep 2017 (Q2 FY 2017-18) 8.3
Apr to Jun 2017 (Q1 FY 2017-18) 8.4

Eligibility Criteria for SCSS

The Post Office Senior Citizen Savings Scheme is available to those who belong to the following groups:

  • A citizen of India over 60 years of age
  • Those retired between 55-60 years of age who have selected a Voluntary Retirement Scheme (VRS) or Superannuation*
  • Over 50 and under 60-year-old retired defence personnel

In order to qualify for retirement benefits, you must invest within one month after you retire.

Note: Senior Citizen Savings Schemes are not available to HUFs or NRIs

Why should you invest in a Senior Citizen Savings Scheme?

Senior Citizen Savings Schemes are a popular investment option among seniors for the following reasons:

  • Guaranteed Returns: Because SCSS is backed by the government, it is a safe and reliable investment option for seniors.
  • High-Interest Rate:  With an interest rate of 7.4% per annum, SCSS is one of the best investment options, especially when compared to traditional savings methods such as FDs and savings accounts.
  • Tax Benefit- The SCSS has the opportunity to deduct up to Rs. 1.5 lakh from its taxable income under section 80C of the Income Tax Act per annum.
  • Simple to invest-It is quite simple to invest in SCSS. You can open an SCSS account at any bank or post office in India that is authorized to offer the service.
  • Quarterly Interest Payouts: SCSS pays quarterly interest to the account holders. Interest is credited on April 1st, July 1st, October 1st, and January 1st of every financial year.

Deposit Limits for Senior Citizen Savings Schemes (SCSS)

Post Office Senior Citizen Savings Scheme (SCSS) allows eligible investors to make a lump sum deposit.

  • Minimum Deposit– A minimum of Rs. 1,000 (and multiples thereof)
  • Maximum Deposit– Rs. 15 lakh or retirement payment, whichever is less

A check or demand draft must be used for deposits exceeding Rs. 1 lakh in SCSS accounts. Cash deposits are permitted for amounts under Rs. 1 lakh.

Maturity Period of SCSS

In a Senior Citizen Savings Scheme, the account matures five years from the date it was opened, but the account holder can extend it another three years after it matures. There is currently only one extension option available, and it must be requested within one year of a SCSS account becoming mature.

What Is The Process For Opening A Senior Citizen Savings Account?

SCSS accounts can be opened at any authorized bank or post office branch in the country.

The Process Of Opening An Scss Account At The Post Office

Senior Citizens Savings Scheme accounts can be opened at all India Post Offices. As part of the account opening process, you will need to submit a copy of your identification, address, and age along with 2 recent passport-sized photographs and the application form.

The Process Of Opening An Scss Account At An Authorized Bank Branch

Senior Citizen’s Savings Scheme accounts can also be opened at select public and private banks, as well as post offices. The following benefits are associated with opening an SCSS account at an authorized bank:

  • Bank branches can credit the depositor’s savings bank account directly with interest earned from their deposits
  • Depositors receive their standard account statements by mail or email
  • Telephone banking is available 24×7

The Following Are Popular Indian Banks That Provide Scss Account Opening Services

You can open a Senior Citizen’s Savings Scheme account at the following banks:

ICICI Bank Corporation Bank State Bank of India
Bank of Baroda Canara Bank Andhra Bank
Syndicate Bank UCO Bank IDBI Bank
Punjab National Bank Bank of India Vijaya Bank
Union Bank of India Dena Bank Allahabad Bank

SCSS Tax Implications

Tax deductions are also available for SCSS investments in the following ways:

  • Under section 80C of the Income Tax Act, 1961, SCSS deposits can be deducted up to Rs. 1.5 lakh per year as a tax deduction.
  • SCSS interest is taxable according to the person’s tax slab. If the interest amount is more than Rs. 50,000 in a given fiscal year, Tax Deducted at Source (TDS) is due. Starting from AY 2020-21, SCSS investment TDS deductions are limited to Rs. 50,000.

Premature Withdrawal of SCSS

The deposit can be withdrawn anytime after the date of opening the account, but you will be subject to penalties based on when you withdraw the funds.

  • Interest will not be paid and if interest is paid in the account, it will be recovered from principle if an exit from the scheme occurs before one year has passed since the account was opened.
  • 1.5% of deposit amount will be deducted as a penalty if the account is closed before two years have passed
  • 1% of SCSS deposit will be deducted if you exit the scheme within 2 to 5 years of opening your account

It should be noted, however, that there is no penalty for closing an extended account after 1 year from the date of extension

In The Event Of The Demise Of The Accountholder, What Will Happen?

The account will be closed if the primary account holder passes away before the account matures, and all the maturity proceeds will be transferred to their legal heirs or nominees. To facilitate the closure of deceased claims, the nominee or legal heirs must submit a written application in prescribed format along with a Death Certificate.

The Difference Between a Senior Citizen Savings Scheme (SCSS) and a Fixed Deposit

Features SCSS FD (Tax Saver)
Interest Rate 7.4% (July-September 2022) 6.5%-7.5% (For Senior Citizens)
Maturity Period 5 Year 5 Year
Tax Benefits (On Investment) Yes Yes
Tax Benefits (On Returns) Taxable Taxable
Premature Withdrawal Allowed (Anytime after opening but with penalty) Not Allowed

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