Senior Citizens Saving Scheme (SCSS) is one of many savings option that offers a safe and reliable investment opportunity to Sr. Citizens above the age of 60 years. As people approach their retirement, they start looking for secure investment options that can provide them with guaranteed returns. In this blog post, we will provide you with a comprehensive guide to the SCSS, covering its features, benefits, eligibility, and the application process.
Features of the Senior Citizens Saving Scheme
The SCSS offers several features that make it an attractive investment option for senior citizens. Some of its key features are:
- The SCSS interest rate is modified once in every 3 months. Therefore, this rate of interest is subject to revision 4 times in a year.
- The returns on this scheme are issued as it is a government-backed instrument. Moreover, contrary to market-linked investments, which are subject to fluctuations, SCSS is safe and offers assured returns to individuals.
- SCSS comes with a maturity period of 5 years. That said, one can extend the scheme for another 3 years by submitting a duly filled-up Form B. Nonetheless, in this regard, the interest rate as per the quarter is levied.
- Individuals can deposit a minimum of ₹ 1,000 to open their accounts. Moreover, one can deposit ₹ 15 lakh or the amount of retirement benefit, whichever is lower.
- Deductions are made against premature withdrawals. If closed before a period of 2 years, 1.5% deduction will be made as a penalty. Furthermore, if closed after 2 years, 1% is deducted. However, for extended accounts, one can withdraw funds post one year without attracting penalties.
- One can expect quarterly disbursements against the deposited amount. The interest gets credited to the account on the 1st of April, July, October, and January.
- The account holder can register a nominee to the Senior Citizens Saving Scheme. So, if the account holder passes away before maturity, the nominee will receive the due amount.
Benefits of the Senior Citizens Saving Scheme
SCSS also offers several benefits to Senior Citizens. Some of its key benefits are:
- Individuals can open their accounts at any post office or authorized bank in India.
- Tax Benefits: Under Section 80C of the Income Tax Act, the principal amount invested in this scheme is eligible for deduction up to a limit of ₹1.5 lakhs in a year. Furthermore, interest earned on SCSS is taxable according to an individual’s tax slab. However, if the amount exceeds ₹50,000 for a fiscal, TDS (Tax Deducted at Source) is applicable.
SCSS Interest Rate
- As of April 2023, the interest rate on the SCSS is 7.4% per annum, compounded quarterly. The interest rate is revised every quarter by the government and is subject to change.
- One of the key benefits of the SCSS is that the interest earned on the scheme is fully taxable. However, senior citizens are eligible for a tax deduction of up to Rs. 50,000 under Section 80TTB of the Income Tax Act. This makes the SCSS an attractive investment option for senior citizens who are looking for a regular income stream and are looking to save on taxes.
Eligibility for the Senior Citizens Saving Scheme
The SCSS is open to the following individuals:
- Indian citizens above the age of 60 years
- Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme (VRS)
List of documents required for the SCSS application process
- KYC Documents: Aadhaar Card, Voter ID Card, PAN Card, Passport
- Utility Bills: Telephone bill, Electricity bill
- Senior Citizen Card or Birth Certificate (Case Specific)
- 2 passport-size photographs
- National Savings Institute – https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=168
- Post Office of India – https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx