Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings option, which is specifically designed to provide financial security to the senior citizens of the country ( Indian residents aged 60 years and above). The 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 and can be extended once by an additional 3 years. With the current interest rate of 7.4% from April to June 2020 the Senior Citizen Savings Scheme focuses to mobilize small savings into regular returns, combined with an investment avenue and tax-benefits.Read more
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For the first quarter (April- June) of the financial year 2020, the current interest rate applicable in the Senior Citizen Savings Scheme is 7.4% per annum. The interest rate of the scheme is regulated by the Ministry of Finance and are subject to periodic change. The rate of interest on SCSS contribution is computed and credited quarterly. Below is the rate of interest applicable on Senior Citizen Savings Scheme (2017-2020):
|Time Period||Interest Rate (% annually)|
|April to June (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|
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It is easy to calculate the interest rate of the senior citizen savings scheme. To know the interest amount on the contribution made, the subscribers need to calculate the compound interest on the deposited amount as per the applicable interest rate of the SCSS for that particular quarter. After computation, the subscribers will get to know the interest amount on the deposited amount. The payment is released to the savings account of the account holder every year.
Read Also: Post Office Interest Rate
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 fulfill the particular insurance needs of an investment-oriented senior citizen.
Here are the benefits and features of this plan.
To be eligible to buy a saving schemes plan for senior citizens, the applicant needs to fulfill the following criteria.
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 the 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.
If there is a joint account, the eligibility is determined based on the aforementioned age criteria of the primary account holder. There aren’t any age restrictions or requirements that are imposed on the secondary applicant.
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.
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.
The deposits in the 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.
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 the rate of interest.
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 Saving Scheme is famous for offering a higher rate of interest.
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 senior citizen aspirants can have an account by following the applicable account opening process of Senior Citizen Saving Scheme, online or offline.
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.
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.
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:
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:
The below documents are required to open an SCSS account in India:
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.
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.
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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