Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme is one of the most popular investment tools, specially designed for senior people in India. Senior Citizen Savings Scheme ensures a regular income even after retirement to secure those sunset days. The regular flow of income, the safety of investment and tax benefits are some of the attractive benefits of these SCSS schemes.

The deposits under the Senior Citizen Savings Scheme are invested for the tenure of 5 years where in case of an emergency one can withdraw the amount. The main objective of this Senior Citizen Savings Scheme is to mobilise a small savings into regular returns, combined with an investment avenue and tax-benefits.

Why is Senior Citizen Saving Scheme Important?

Senior Citizen Saving Scheme has been considered as an ideal option for senior citizens as this plan ensures a regular income after retirement. The rate of interests is also at the higher side. The current rate of interest offered is 8.6% in the fourth quarter of the fiscal year 2018-19.

Below is the rate of interest applicable on Senior Citizen Savings Scheme (2017-2019):

Advantages of Senior Citizen Saving Scheme

Since the Senior Citizen Saving Scheme is a saving as well as an investment instrument for the senior citizens, the SCSS is an ideal option. It takes pride in offering one of the highest rates of interest and being a government-backed investment instrument in our country. The SCSS is formulated to fulfil the particular insurance needs of an investment-oriented senior citizen.

Here are the benefits and features of this plan.

1. Available Easily –Just fill out an application form at your nearest bank/post office and it is done.
2. Reliable-It is an investment product that is backed up by the Indian Government, thus loaded with security assurance.
3. Multiple Accounts- An individual can open multiple Senior Citizen Savings Scheme accounts, individually or as a joint investor. The other investor must be the spouse of the primary investor.
4. Amazing Returns-At the rate of 8.7 percent/year, the returns on the SCSS are very satisfying.
5. Flexible Duration-The SCSS account comes with a time period of five years but it can be extended up to 3 more years. This way, the Senior Citizen Saving Scheme acts as a mid-term and a long-term investment tool as well.
6. Tax Saving for Senior Citizen – According to Section 80C of the Income Tax Act, 1961, senior citizens can save TDS on these schemes.
7. Select Your Investment- There is only one investment permissible for every Senior Citizen Saving Scheme account. The amount needs to be a multiple of Rupees 1000 and it should not exceed Rupees 15 Lakh. This makes the SCSS investment option pretty scalable and affordable.
8. Premature Termination- During the times of financial scarcity, you can close your Senior Citizen Savings Scheme account and access your money. This option is applicable after your account has been active for a period of 365 days. It is a funds source, which can be easily used at a moment’s notice. Although, post 1 year, 1.5 percent is charged as a penalty and the funds in your SCSS account would be deducted accordingly. After a time duration of 2 years, 1 percent is charged as penalty in case of pre-mature termination.
9. Minimum Paperwork – The application process of the Senior Citizen Saving Scheme requires minimum paperwork. The Know Your Customer documents usually include the birth certificate, passport, voter’s id, PAN card, senior citizen card etc.

Eligibility Criteria for Buying Senior Citizens Saving Schemes

To be eligible to buy a saving schemes plan for senior citizens, the applicant needs to fulfil the following criteria.

1. An Indian citizen with the age of 60 years or above.

Under certain conditions,  an applicant can be 55 years old or above, but his/her age must be lesser than 60 years, provided the person has been retired under VRS category. Moreover, he must open a Senior Citizens Saving Scheme account within 1 month of enjoying the retirement benefits. Not just that; the invested amount can’t go beyond the amount of the retirement benefits.

2. If there is a joint account, the eligibility is determined on the basis of the aforementioned age criteria of the primary account holder. There aren’t any age restrictions or requirements that are imposed on the secondary applicant. 

SCSS Deposit Limits

An individual can invest up to a maximum limit of Rs 15 lakh in the Senior Citizen Saving Scheme.  They are allowed to make a lump sum deposit of Rs. 1000. However, the amount invested shouldn’t be greater than the amount to be received on retirement. Hence, the depositor can invest up to Rs. 15 lakh or the amount equal to the retirement benefit.

The deposits in the Senior Citizen Saving Scheme can be made in cash, hence it should be less than Rs 1 lakh. It is mandatory to use cheque/demand draft in case of deposits more than Rs. 1 lakh.

Tenure of Senior Citizen Savings Scheme

The tenure of this scheme is 5 years, therefore the deposits mature after 5 years from the date of account opening. However, the senior citizens with SCSS account have the option of exceeding the tenure for another 3 years. The extension can be made once within 1 year of maturity of the Senior Citizen Savings Scheme.

Tax Benefits to be Availed in Senior Citizens Savings Scheme

The deposits in Senior Citizen Saving Scheme account is eligible for income tax benefit u/s 80C of the Income Tax Act, 1961.

However, the interest earned is fully taxable as per the prevailing tax laws. Tax Deduction at Source (TDS) is applicable in case of interest more than Rs. 50,000 for a financial year from AY 2010-21. 

How to Calculate the SCSS Maturity Amount?

Investments made towards a Senior Citizen Savings Scheme account are compounded which is paid annually. These payouts are credited to the account holder’s savings account automatically. The current rate of interest offered under the Senior Citizen Savings Scheme is 8.7%. Let’s say if someone deposits Rs 15 lakh in SCSS for 5 years, the maturity value of the deposits will be (15,00,000*1.086)^5 = Rs 22.65 lakh).

One can calculate the SCSS maturity amount using the calculator online. This is an online tool that helps in calculating the amount based on the information provided such as the tenure, the amount invested or rate of interest. 

How to Open a Senior Citizen Saving Scheme Account at the Post Office?

An SCSS account can be opened at the post office as well. In order to open an account, senior citizens can visit the nearby post office and fill up the relevant form. The duly filled in form has to be submitted along with the supporting documents such as age proof, address proof, a cheque of the deposit amount, identity proof etc. Post Office Senior Citizen Savings Scheme is famous for offering a higher rate of interest. 

How to Register Senior Citizen Saving Scheme Account at Banks?

Apart from the post offices across India, SCSS account is available at various public/private sector banks as well. Having an SCSS account with authorised banks has its own set of perks:

• The accumulated interests can be directly credited to the savings account of the Senior Citizen Saving Scheme account holder
• Account statements are provided on regular intervals through email or post
• Round the clock customer services facility through phone banking

The senior citizen aspirants can have an account by following the applicable account opening process of Senior Citizen Saving Scheme, online or offline.

 Banks that offer Senior Citizen Saving Scheme

Apart from the post offices, the Senior Citizen Savings Scheme is also offered by the selected banks in the country. From 2004, there are 24 public sector banks and 1 private sector bank that are authorized to offer Senior Citizen Saving Schemes. Here is the list of these banks.

Public Sector Banks

• Allahabad Bank
• Andhra bank
• State Bank of Bikaner and Jaipur
• State Bank of India
• State Bank of Patiala
• State Bank of Mysore
• State Bank of Travancore
• State Bank of Hyderabad
• Bank of Baroda
• Bank of Maharashtra
• Bank of India
• Canara Bank
• Corporation Bank
• Central Bank of India
• Syndicate Bank
• Dena Bank
• Union Bank of India
• UCO Bank
• Vijaya Bank
• IDBI Bank
• Indian Overseas Bank
• Indian Bank
• Punjab National Bank
• United Bank of India

Private Sector Bank

• ICICI Bank Ltd.

Senior Citizen Saving Scheme Application Form

Application form of SCSS account can be availed either online on the official website of India Post or offline at the various post offices across the country. Moreover, a considerable number of public and private sector banks are offering Senior Citizen Savings Scheme application form downloaded from their official websites. One can simply visit the respective bank’s website and download the form there. Or also can collect the physical form by visiting the participating bank branches in India, as per the convenience.

Senior Citizen Saving Scheme Application Process

Unfortunately, the account can’t be opened online, thus the applicant has to download the application form, take a print out of it and fill the form with required details. The filled-in form has to be submitted along with the KYC documents to the post office or bank counter. At the time of opening a Senior Citizen Saving Scheme account, the following information has to be furnished:

• Name of the applicant
• PAN number of the applicant
• Details of the family members including father/mother/husband/wife
• In case of a joint account, mention the name, age and address of the person with whom the account is shared
• Cheque/demand draft of the amount to be deposited
• Name of the nominee if any

Is Premature Withdrawal of Deposit Possible?

The account holders are allowed to withdraw the deposits before it matures. However, it is allowed only after a year and is subjected to a minimum charge depending on the amount to be withdrawn. The penalty on premature withdrawals are as follows:

• 1.5% of the deposit amount as a penalty in case of premature withdrawal before completion on 2 years
• 1% of Senior Citizen Savings Scheme deposit amount as a penalty in case of premature withdrawal between 2 years and less than 5 years

Documents required to Open Senior Citizen Saving Scheme Account

The below documents are required to open an SCSS account in India:

• Duly filled application form to be collected from the post office or bank
• KYC form
• Photographs of the applicant
• Permanent Account Number (PAN)
• Address proof
• Age Proof
• Employer’s certificate in case of retirees
• Proof of date of disbursal of the retirement benefits

Terms & Conditions Applied to SCSS

A well-structured path is an important ingredient for the recipe of success and ensuring your peace of mind at the same time. When you look forward to enrolling in the SCSS, make sure that you meet the following conditions.

1. You have to be 60 years of age or above. In particular situations, people falling in the category of 55 years and above can enroll.
2. There is only a single deposit permitted in your Senior Citizen Savings Scheme account. The deposit amount must be in the multiples of Rupees 1,000 and the maximum investment amount is Rupees 15 Lakh.
3. The interest accumulated in a Senior Citizen Saving Scheme account is paid on 31 March/30 September/31 December at the first time and after that, it is payable at 31 March, 30 June, 30 September and 31 December every year.
4. The maximum time period for SCSS is five years. Although, once maturity is attained, this duration can get extended for a time period of three years.
5. An account holder can enroll in various accounts at the same time. It can be individual as well as a joint account with his/her spouse. Although, the account holder must make sure that all eligibility criteria catering to the operation and validity of such accounts are fulfilled. The minimum balance must be maintained as well.
6. Cash is an accepted mode of investment in case the amount is lesser than Rupees 1 Lakh. In case this amount is greater than Rupees 1 lakh, then the cash isn’t accepted. The account holder must make the payment using a cheque.
7. An account can be very easily and conveniently transferred from one post office or bank to the other.
8. SCSS offers the facility of nomination which can be easily availed when you open an account or after your account has been active for a particular time period.
9. In case the account holder wants to terminate his/her account before maturity then the applicable penalty is-
   • After 1 year- 1.5 percent of the invested amount
   • After 2 years- 1 percent of the invested amount.

Keep in mind that premature closing of the SCSS account is possible if the account has remained active for the minimum period of 1 year.

10. If you wish to have a joint account, the main account holder is considered as the investor and the second account holder can only be the primary account holder’s spouse.
11. In case the accumulated interest on the deposit amount is above Rupees 10,000 per year, tax is deducted at source.
12. The accumulated interest is deposited in a savings account which is maintained at the post office or bank, where the SCSS is maintained.
13. The investments made in the SCSS account offers tax benefits according to the provisions of Section 80C of the Income Tax Act, 1961. 

Wrapping it up

Being a savings oriented yet remunerative investment instrument, the rate of interest of senior citizen savings schemes is locked at 8.7 percent. Rather than putting their hard-earned savings either in the pretty low yielding savings bank accounts or high-risk alternatives such as mutual funds, it is wise for senior citizens to invest their money in the senior citizen saving scheme. It offers the senior citizens a platform to invest their money in a high yielding, safe and widely popular savings instrument.

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