Senior Citizens’ Saving Scheme or SCSS is a regular income plan supported by the government of India. Any senior citizen of the country, individually or jointly, can invest a lump sum amount in the scheme and enjoy a regular income along with decent tax benefits. SCSS is aptly suitable for Indian citizens over 60 years of age. The current SCSS interest rate offered by banks and post offices is 7.4% per annum.
Things to Know About SCSS
- SCSS is a post-retirement regular income plan primarily for senior citizens of India
- The scheme is backed by the government of India
- Individuals over 60 years of age are eligible to invest in SCSS
- The current senior citizen saving scheme interest rate is 7.4% p.a
- Senior citizens can invest in this scheme either individually or jointly
- SCSS allows investors to enjoy tax benefits
- SCSS account can be opened in banks and post office
What is an SCSS Account?
An SCSS account allows eligible investors to invest a lump sum amount of money. The account will offer a regular income to the investor post retirement and allow him/her to enjoy tax benefits. Any senior citizen (above 60 years of age) can open an SCSS account in an authorized bank or post office.
SCSS Account in Post Office
A senior citizen can open an SCSS account in a post office, just like any other bank authorized to open an SCSS account. The process of opening an SCSS account in a post office is no different than opening a post office savings account. Just visit the nearest branch and check the eligibility criteria and the benefits of SCSS to open the account.
What is the Current Interest Rate of SCSS?
The Senior Citizen Savings Scheme rate of interest is revised every quarter. The current interest rate, i.e; SCSS interest rate 2021 for the third quarter is 7.4% annually. The interest rate has remained unchanged since the first quarter of FY 2020-21.
Eligibility Criteria for SCSS
Individuals who fall under the below mentioned categories are eligible to invest in SCSS:
- Indian Citizens above 60 years of age
- Retired Indian citizens between 55-60 years of age (Should have opted for Voluntary Retirement Scheme (VRS) or Superannuation)
- Defense Servicemen (Retired and between 50-60 years of age)
How Much Can You Invest in SCSS?
The eligible investor can open multiple accounts under SCSS. However, the sum of the deposits made in the accounts should not exceed Rs 15 lakhs (limit set by the government). The minimum amount that can be deposited in an SCSS account is Rs 1,000. Moreover, the deposits have to be made in a lump sum and the investor cannot open more than one SCSS account in the same branch during the same month.
Banks Authorized to open SCSS Accounts
Apart from the post office, the government of India has authorized the following banks to offer the SCSS scheme to the eligible investors:
- Allahabad Bank
- Andhra bank
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- State Bank of India
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
- ICICI Bank
Tax Benefits Under SCSS
The deposits/contributions made in SCSS are eligible for tax exemption under Section 80C of the Income-tax Act, 1961. However, the interests earned from the investment in SCSS are taxable. For interests earned above Rs 50,000 annually, the recipient has to pay a certain TDS.
SCSS Maturity: Things to Know
Senior Citizen Savings Scheme comes with a maturity period of 5 years. There is also an option to extend the maturity further for 3 more years. The investor can also opt for a premature withdrawal but that costs a penalty of 1.5% of the total invested amount if the withdrawal is done under 2 years, and a penalty of 1% if withdrawn after 2 years.
Benefits of Investing in SCSS
SCSS is an ideal fixed income investment plan for senior citizens. There are a number of benefits of investing in SCSS.
- Fixed Income: SCSS offers a generous return of 7.4% per annum on the total invested amount. This is around 30-40% more than the interest rate offered in fixed deposits.
- Safe and Reliable: The savings scheme is backed by the government of India and hence, it is reliable and one of the safest investment instruments.
- Ideal Retirement Plan: SCSS is one of the best investment plans for retired individuals. It allows them to lead a decent life with the interest earned from the scheme.
- Easy to Open: One can open an SCSS account in any of the approved banks by the government of India as well as in any nearest post office branch.
- Extendable Tenure: An SCSS account has a maturity period of 5 years. However, it can be further extended to 3 years more, i.e; a total of 8 years.
- Transferable: An SCSS account can be transferred to any branch (bank or post office across India.
- Tax Deduction: Investors can claim tax exemption of up to Rs 1.5 lakh under the provisions of Section 80C of the Indian Tax Act, 1961.
How to Open SCSS Account in Bank / Post Office?
In a Bank
- Visit the nearest branch of any of the banks approved by the government and check whether the branch offers an SCSS facility
- Ask for the SCSS account opening form and fill in the required details
- Complete the documentation required
- Pay the amount you want to deposit in the scheme
- The account will be opened after the payment is processed
In a Post Office
- Ask for an SCSS account opening application form
- Enter the savings account number in which the interest will be deposited
- Enter other details and attach to be account holder's photograph
- Mention the nominee
- Submit the necessary documents
To conclude, SCSS is a very beneficial fixed-income investment scheme for senior citizens. It comes with additional perks like tax savings, up to 8 years of maturity, security and reliability, etc.