Senior Citizen Savings Scheme (SCSS)

The SCSS, or Senior Citizen Savings Scheme, is a government-backed savings option designed to provide financial security to seniors aged 60 years and above. Currently SCSS provides an interest rate of 8.20% p.a. (Q1 FY 2024-25). The regular flow of income, the safety of investment, and tax benefits are some of the attractive benefits of the SCSS scheme.

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Let us have a detailed overview of this old-age savings scheme in this article.

What is the Senior Citizen Saving Scheme (SCSS)?

The Senior Citizen Savings Scheme (SCSS) is a retirement benefit scheme backed by the Indian government. It's designed to provide financial security to senior citizens by offering a safe investment option with a guaranteed interest rate.  SCSS scheme allows individuals aged 60 and above (or 55 for retired defense personnel and those taking voluntary retirement) to invest a lump sum amount. The scheme offers several benefits, including regular interest payouts, tax deductions on the investment amount, and a high degree of security due to government backing. You can open an SCSS account at designated post offices and authorized banks. SCSS is one of the best tax-saving investment plans for senior citizens.

Features of the Senior Citizen Saving Scheme

The key features of the SCSS scheme are:

  • High Interest Rates: SCSS offers competitive and fixed interest rates on the deposit amount. The current rate (as of May 24, 2024) is 8.2% per annum. https://cleartax.in/s/senior-citizen-savings-scheme

  • Government Guaranteed: Senior Citizen Saving Scheme is a government-backed scheme, ensuring high safety and security for your investment.

  • Tax Benefits: Deposits made in the SCSS scheme qualify for tax deduction under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakh per year. 

  • Tenure: The maturity period of the Senior Citizen Savings Scheme is 5 years. However, you can extend it for a further 3 years after maturity.

  • Minimum and Maximum Investment: The minimum deposit amount is Rs. 1,000, and the maximum is Rs. 30 lakh. You can only make a single deposit when opening an account.

  • Multiple Accounts: Individuals can open more than one SCSS account, either solely or jointly with their spouse.

  • Easy Account Opening: You can open an SCSS account at any authorized bank or post office in India. The process is relatively simple.

  • Transferable Accounts: SCSS accounts can be transferred between banks and post offices across India.

  • Premature Closure: Premature closure of the account is allowed under certain conditions, but a penalty may apply.

  • Quarterly Interest Payments: Interest earned on the deposit is paid quarterly, providing a regular income stream.

  • Nomination Facility: You can nominate a beneficiary to receive the account balance in case of your demise.

  • Premature Withdrawal: Permitted (under exceptional circumstances)

    • Withdrawal Allowed After 1 Year: Some penalty

    • Withdrawal Between 1-2 Years: Penalty of 1.5% of the deposit amount

    • Withdrawal Between 2-5 Years: Penalty of 1% of the deposit amount

**Note: The maximum deposits limit increased from Rs. 15 lakhs to Rs. 30 lakhs from 01 April 2023

Eligibility Criteria of Senior Citizen Saving Scheme

To be eligible to buy the senior citizen savings scheme, the applicant needs to fulfill the following criteria:

  • Individuals aged 60 years or above on the account opening date.

  • Individuals who retired under superannuation, VRS, or special VRS between 55 and 60 years. Investment must be made within three months of receiving retirement benefits.

  • Ex-servicemen aged 50 to 60 years can invest. Investment needs to be made within three months of retirement benefit receipt.

  • Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible for SCSS.

Benefits of the Senior Citizen Saving Scheme

Senior Citizen Saving Scheme is a savings and investment instrument—the best investment option for elderly and retired individuals. Below are some benefits of the SCSS scheme:

  • Safety and Security: SCSS scheme is a government-backed scheme, making it one of the safest investment options for senior citizens.

  • High Interest Rates: SCSS offers competitive interest rates compared to other savings options. The current interest rate for SCSS is 7.4% per annum (as of the April-June 2024 quarter).

  • Tax Benefits: Deposits made in SCSS are eligible for tax deduction under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakh per year.

  • Easy Investment Process: Opening an SCSS account is a simple process. You can do it at any authorized bank branch or post office in India.

  • Flexible Investment Options: The minimum investment amount is Rs. 1,000, and the maximum is Rs. 30 lakh. You can also extend the maturity period of the scheme for an additional 3 years after the initial 5-year term.

  • Regular Income: SCSS scheme offers quarterly interest payouts, providing a steady stream of income for senior citizens.

  • Premature Closure: Senior Citizen Savings Scheme allows for premature closure after 1 year, with some penalty on the interest earned.

  • Transferability: You can transfer your SCSS account between banks and post offices across India, offering convenience if you change your location.

  • Nomination Facility: You can nominate a beneficiary for your SCSS account, ensuring your savings are passed on to your chosen recipient after your passing.

Senior Citizen Saving Scheme Interest Rate

Below is the SCSS interest rate between the periods 2017-2024:

Time Period Interest Rate (% annually)
April to June (Q1 FY 2024-25) 8.2%
January to March (Q4 FY 2023-24) 8.2%
October to December (Q3 FY 2023-24) 8.2%
July to September (Q2 FY 2023-24) 8.2%
April to June (Q1 FY 2023-24) 8%
January to March (Q4 FY 2022-23) 8%
October to December (Q3 FY 2022-23) 7.6%
July to September (Q2 FY 2022-23) 7.4%
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) 7.40
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%

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product an insurer offers.

How Does the Senior Citizen Saving Scheme Work?

  • Open an SCSS account with a single instalment by contributing from Rs. 1000 up to Rs. 30 lakh.

  • Deposit the amount within 1 month from the date of receiving a retirement benefit from the employer.

  • Retirement benefits include gratuity, leave encashment, and provident fund dues, among others.

  • Excess deposit over the ceiling amount is refunded immediately to the account holder.

  • Interest is credited once every quarter.

  • Interest withdrawal options include ECS or auto credit mode through the post office.

  • Account can be closed prematurely after the date of opening.

  • Extend the account for another three years from the date of maturity.

  • Extension can be done one year at a time from the date of maturity.

Senior Citizen Saving Scheme Application Process

The Senior Citizen Savings Scheme (SCSS) offers benefits to retirees. Here's how to apply:

  • Visit a participating bank or post office.

  • Collect and fill out the SCSS application form.

  • Attach KYC documents (ID, address proof).

  • Submit the form with an initial deposit (cheque preferred).

Note: Applications cannot be made online.

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

An SCSS account can be opened by filling out the application form at the post office with these 2 methods:

  • Access the form from the nearest Post Office branch

  • Download the application form from the official India Post website

Steps to fill out the SCSS application with the Post Office:

Step 1: Get the application from the nearby Post Office branch or download it from India Post's official website

Step 2: Enter the Name of the Post Office Branch in the available space in the top left corner

Step 3: Enter the Post Office Savings Account Number, if any

Step 4: Enter the Post Office branch address under the “TO” column

Step 5: Paste the passport-sized photographs of the applicant(s)

Step 5: Fill in the applicant’s name in the required space and tick-mark on the “SCSS” option

Step 6: Tick on the “Additional Facilities Available” option if you want to open a Savings Account

Step 7: Select the category of SCSS account holder:

  • Self

  • Minor Child (through a guardian)

  • Person of Unsound Mind(through a guardian)

Step 8: Select the type of SCSS account:

  • Single

  • Joint

Step 9: In the next section, enter the SCSS deposit amount in figures and words

Step 10: Enter the cheque number and date if depositing the amount through a cheque

Step 11: Enter the credentials of the applicant(s)

Step 12: Attach all the necessary documents and tick mark the provided proofs from the list mentioned in the form

Step 13: Checkmark the SCSS Declaration and enter the details in the provided space

Step 14: Sign the application at the required places by all the applicant(s)

Step 15: Mention the name and details of the SCSS account nominee with their signature

Process to Register Senior Citizen Saving Scheme Account at Banks

The facility to open an SCSS account is also available at various public/private sector banks. 

Steps to open an SCSS Account with the Banks:

Step 1: Collect the application form by visiting the nearest branch of the authorised banks

Step 2: Enter the necessary details in the required spaces

Step 3: Attach the necessary proofs and documents

Step 4: Pay the deposit amount and receive the payment receipt

Step 5: Duly sign and submit the filled application form

Step 6: The employees at the bank will process the application and open an SCSS account immediately 

Banks offering Senior Citizen Saving Scheme

Apart from the post offices, the Senior Citizen Savings Scheme is also offered by selected banks in the country. Below mentioned are the banks offering the Senior Citizen Saving Scheme: 

  1. Public Sector Banks:

    • Allahabad Bank (merged with Indian Bank)

    • Andhra Bank (merged with Union Bank of India)

    • Bank of Maharashtra

    • Bank of Baroda

    • Bank of India

    • Canara Bank

    • Central Bank of India

    • Dena Bank (merged with Bank of Baroda)

    • Indian Bank

    • Indian Overseas Bank

    • Oriental Bank of Commerce (merged with PNB)

    • Punjab National Bank

    • State Bank of Bikaner & Jaipur (merged with SBI)

    • State Bank of Hyderabad (merged with SBI)

    • State Bank of India

    • State Bank of Mysore (merged with SBI)

    • State Bank of Patiala (merged with SBI)

    • State Bank of Travancore (merged with SBI)

    • Syndicate Bank (merged with Canara Bank)

    • UCO Bank

    • Union Bank of India

    • United Bank of India (merged with PNB)

    • Vijaya Bank (merged with Bank of Baroda)

  2. Private Sector Bank:

    • ICICI Bank

Documents Required to Open Senior Citizen Savings Scheme Account

Below is the list of documents required to open an SCSS scheme account: 

  1. Mandatory Documents (Know Your Customer - KYC)

    • Two Passport-Sized Photographs

    • Proof of Identity: Submit 1 of the following:

      • Permanent Account Number (PAN) Card

      • Aadhaar Card (Aadhaar is mandatory. If you haven't been assigned one yet, provide proof of application for enrolment)

      • Passport

      • Voter Identification Card

    • Proof of Address: Provide 1 of the following:

      • Aadhaar Card (if your address is updated)

      • Landline Bill (not older than three months)

      • Electricity Bill (not older than three months)

      • Water Bill (not older than three months)

      • Ration Card with address

      • Passport

      • Bank Statement with current address

  2. Additional Documents (if applicable)

    • Proof of Age: If you don't use Aadhaar or PAN as proof of identity and address, submit one of the following:

      • Birth Certificate

      • Voter Identification Card

      • Senior Citizen Card

      • Passport

    • Certificate from Employer (if under 60 years old)

Tax Benefits Under the Senior Citizen Savings Scheme

The SCSS scheme offers tax advantage under Section 80C of the Income Tax Act, 1961. Here's how it benefits you:

  • Deduction on Investment: You can deduct up to Rs. 1.5 lakh per year from your taxable income for the amount invested in SCSS. This deduction applies to the principal amount you deposit, reducing your overall tax liability.

Note: This deduction applies to the total amount invested under Section 80C, which includes other investments like PPF and ELSS.

  • Taxable Interest: The interest earned on your SCSS investment is taxable as per your income tax slab. However, there's no Tax Deducted at Source (TDS) on this interest income.

Remember: TDS applies only if your total interest income from all sources exceeds Rs. 50,000 in a financial year.

FAQs

  • Can an SCSS account be extended?

    Yes, it is possible to extend an SCSS account within one year after maturity, allowing the depositor to extend it for a period of three years.
  • Is TDS applicable to the SCSS scheme?

    Yes, TDS is applicable if the interest exceeds Rs. 10,000 per annum. Interest payments under this scheme are not exempt from tax deduction at source.
  • Can the SCSS account be transferred from one deposit office to another?

    Yes, an SCSS account can be transferred from one deposit office to another using Form G.
  • Is any income tax rebate/exemption admissible?

    No, there are no income tax rebates or exemptions applicable to this scheme.
  • Can both spouses open separate accounts?

    Yes, individual accounts can be opened by both spouses, provided that the maximum deposit limit does not exceed Rs. 15 lakh each. However, it must comply with the scheme's regulations.
  • What will be the share of the joint account holder in the deposit in an account?

    The entire amount is attributed to the first depositor or applicant. The addition of a spouse as a joint account holder does not affect this allocation.

Past 5 Year annualised returns as on 01-06-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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