The Senior Citizens Savings Scheme (SCSS) is primarily for the senior citizens of India. The scheme offers a regular stream of income with the highest safety and tax saving benefits. It is an apt choice of investment for those over 60 years of age.
The Senior Citizens’ Saving Scheme is a retirement benefit program by the Government of India. Individuals over 60 years can opt for the SCSS scheme by investing by making an individual or joint investment. In addition, this scheme provides tax benefits. In SCSS, the installment amount ranges between ₹1,000 and ₹15 lakhs. This amount is constricted to the retirement benefits. One must deposit it in the Senior Citizen Scheme account within a month from receiving retirement benefits from his/her employer. Moreover, if individual deposits more than the given amount, the additional funds get refunded to the account holder. One can extend the scheme for 3 more years from its date of maturity. The Interest Rate is 7.40% per annum (Q2 FY 2022-23). The Tenure is 5 years (with an option to extend it for 3 more years). The Minimum Investment Amount is ₹1,000. The Maximum Investment Amount ₹15,00,000 or the amount received on retirement, whichever is lower.
Senior Citizen Savings Scheme (SCSS)
SCSS full form is Senior Citizen Savings Scheme. It is a government-sponsored savings instrument for individuals above the age of 60. The Government of India introduced this scheme in 2004, intending to provide senior citizens with a steady and secure source of income for their post-retirement phase.
It is one of the most lucrative savings schemes in India and offers comparatively substantial returns to its subscribers. Furthermore, it is a government-backed scheme, and hence, the risk of capital loss is negligible.
Individuals can apply for SCSS through post offices as well as public & private banks.
Features of the Senior Citizen Savings Scheme
| Senior Citizen Savings Scheme (SCSS) | Particulars |
| Tenure | 5 years |
| Interest Rate | 8.2% p.a. |
| Minimum Investment | Rs 1,000 |
| Maximum Investment | Rs 30,00,000 |
| Tax Benefits | Available under Section 80C upto Rs.1.5 lakh |
| Premature Closure | Available |
| Nomination Facility | Available |
Secure investment- SCSS is a government-backed scheme. Hence, the invested amount is secure and there is guarantee of returns upon its maturity.
Interest payment-Individuals who open an SCSS account get an interest on the principal deposited amount at the rate fixed by the government. They will receive a quarterly interest against their deposited amount. Interest payment will be credited to an individual’s account on the first date of April, July, October, and January.
Mode of deposit- An individual can deposit the money in cash when the amount is below Rs.1 lakh. When the deposit amount is above Rs.1 lakh, an individual should make the payment by cheque.
Maturity of the scheme -The maturity period of SCSS is 5 years. However, individuals can extend the maturity period for 3 more years by submitting an application. The application for an extension of maturity should be given in the last year.
Nominations- Individuals can appoint nominees either while opening an SCSS account or after opening the account.
Number of accounts -Individuals can open more than one SCSS account. They may open another account either by themselves or a joint account with their spouse. However, joint accounts can be opened only with the spouse, and the initial depositor is the investor who first deposits in the joint account.
Minimum and maximum deposit amount -The minimum deposit is Rs.1,000 and the maximum is Rs.30 lakh. The deposits can be made in multiples of Rs.1,000.
Transfer of an account -An SCSS account can be transferred from a post office to a bank and vice versa.
Premature closure-Individuals can withdraw the amount and close the account at any time on an application in Form-2 subject to the following conditions
- Closed before one year – interest paid on the deposit in the account shall be recovered from the deposit.
- Closed before two years – 1.5% of the deposit shall be levied as a penalty
- Closed after 2 years – 1% of the deposit shall be levied as a penalty
Multiple withdrawals from an account shall not be permitted.
Calculation of Interest under the Senior Citizen Savings Scheme
Interest is compounded quarterly and disbursed every quarter on the first date of April, July, October, and January. The primary components used for its calculation are –
- The principal or deposit amount
- Interest rate
- Maturity period
The maturity period is fixed, while the other two components are variable. The interest rate under which an individual invested is considered for interest calculation.
Eligibility for SCSS
- Individuals above 60 years.
- Retired civilian employees above 55 years and below 60 years. However, the investment should be made within 1 month of receipt of retirement benefits.
- Retired defense employees above 50 years and below 60 years. However, the investment should be made within 1 month of receipt of retirement benefits.
- Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open a SCSS.
Benefits of SCSS
Here are some of the major benefits of Senior Citizen Savings Scheme-
- Assured Returns: Since SCSS is a government-backed scheme, it provides guaranteed returns.
- Tax Benefits: For SCSS, an individual can claim a tax deduction under Section 80C up to Rs 1,50,000 pa.
- Easy Investment Process: Opening an SCSS account is fairly easy. It can be opened in simple steps at any authorized bank or any post office in India.
- High Rates of Interest: SCSS offers high-interest rates on the principal sum.
SCSS application process
You can open an SCSS account either at an authorised bank branch or at a post office branch. If the bank allows, you can open the SCSS account online on the bank’s internet banking portal or mobile banking app. There is no option to open the SCSS account online with the post office.
You can also download the SCSS application form from the India Post website. You need to fill the form and submit it with the authorised post office along with the required documents and pay the deposit to open the account.
How to fill the Post Office SCSS application form?
You can collect the SCSS application form either at the post office branch or on the official website of the India Post. The process of filling the application form is:
- Enter the post office branch name on the top left corner of the form.
- If you already have a savings account with the post office, enter the account number.
- Under the ‘To’ section, enter the branch address of the Post Office.
- Paste the account holder’s photograph.
- Now, write the account holder’s name in the first blank space and tick on ‘SCSS’ option among the other options.
- You don’t have to select any options provided under the ‘Additional Facilities Available’ section as they are valid only if you are applying to open a savings account.
- Next, select the account holder type, i.e. self, minor through guardian, or person of unsound mind through guardian.
- Select the account type, whether single, either or survivor, or all or survivor.
- Move to the field number 2 where you have to enter the deposit amount in figures and then in words. If you are presenting a cheque, write down the cheque number and date.
- Enter the personal details of account holder(s).
- Tick the cells where you have provided the requested document proofs at the end of the table.
- Tick the SCSS declaration and enter the details.
- Signatures of all the account holders must be added at the end of the page 1 of the form and in Page 2.
- Mention the nominee for the account and the relevant details of the nominee you have chosen. Add the signatures of all account holders to validate this information.
How to open a SCSS account with a Bank?
Below are the steps to open a SCSS account with an authorised bank:
Step 1: Go to the nearest authorised bank branch and collect the SCSS application form.
Step 2: Fill in the necessary information on the application form.
Step 3: Attach the required documents.
Step 4: Submit the application form, documents and the deposit money with the bank staff.
Step 5: The bank employees will process the application and open the SCSS account.
Which banks offer SCSS?
The following banks offer SCSS:
- 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
- Oriental bank of Commerce
- Punjab National Bank
- State bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of India
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
- ICICI Bank
Along with these banks, the Post Office also offers SCSS.
Documents required to open SCSS account
- Two passport-size photographs
- Identity proof, such as a PAN card, Voter ID, Aadhaar card or passport.
- Proof of address, such as Aadhaar card or telephone bills.
- Proof of age, such as PAN card, Voter ID, birth certificate or senior citizen card.
All the documents must be self-attested.
Tax benefits under the SCSS- Under Section 80C of the Income Tax Act, 1961, individuals are eligible for tax deductions on investments up to Rs.1.5 lakh. In the case the interest amount is more than Rs.50,000 p.a., TDS will be deducted.
To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At 8.2% p.a. interest rate and an investment amount of Rs.30 lakh, the monthly income is stated to be Rs.20,500 per month for each investor.
FAQs
How to open an SCSS account online?
As of now, there is no option for you to open an SCSS account online. Neither do the authorised banks nor the Post Office provide you a platform to open the account online. Please follow the steps provided above to open the account offline.
How many accounts can be opened under SCSS by a senior citizen?
you can make the deposit to the account in a single payment. Therefore, an account holder may operate more than one account under the scheme subject to the condition that the deposits in all the accounts taken together shall not exceed the maximum limit, i.e. Rs.30 lakh. Also, more than one account shall not be opened in the same deposit branch during a calendar month.
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