What is the Senior Citizen Savings Scheme?

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What is the Senior Citizen Savings Scheme?

As the name suggests, the Senior Citizens Savings Scheme (SCSS) is a government initiative designed for the individuals who are 60 or above. Under this scheme, the deposits mature after 5 years but can be extended once for 3 years. This allows the account holders to continue to avail the scheme benefits for an extended period. 

This scheme comes with high security and has tax saving benefits. It was first introduced in 2004, by the Government of India, with the aim of offering the senior citizens a reliable source of income after their retirement. Individuals can open more than one bank account either on their own or a joint account with their spouse. There is no limit on the number of accounts which can be held by an individual, but the total investment must adhere to the maximum limit across all accounts.

SCSS Features 

Retired defense services personnel, except civilian employees, can open an account at the age of 50 if they meet the eligibility criteria. The terms and conditions for SCSS stay the same regardless of the bank or post office. The interest rate for SCSS is decided by the Government every quarter. The interest is paid on a quarterly basis and is fully taxable. Senior Citizen Savings Scheme (SCSS) interest rates for the fourth quarter (January-March) of FY 2023-24 is currently fixed at 8.2% p.a. It is one of the highest interest rates offered by a fixed-income small savings scheme in the country. Under the SCSS, the minimum deposit allowed in an SCSS account is Rs 1000. Rs 15 lakhs is the maximum deposit allowed in an SCSS account.

SCSS Eligibility Criteria

If you are interested in applying for the Senior Citizen Savings Scheme, you must meet the following eligibility criteria:

• The person has to be a citizen of India
• The person should be 60 or older
• Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or superannuation on the condition that they make investment within 3 months of availing the benefits of the retirement.
• Retired defense personnel above the age of 50 and below the age of 60, provided their investment is made within 3 months of availing the benefits of the retirement.
• Spouse of a state/central government employee who had passed away while on duty are permitted to invest the financial assistance amount (death compensation) under the scheme, on the condition that the deceased employee was 50 years of age or older.
• HUFs and NRIs are not eligible for SCSS

Popular Banks in India that Offer SCSS Account Facility

Mentioned Below is a list of some popular banks which offer the facility of opening an account under the Senior Citizen’s Savings Scheme:

Note: Not only banks, but even post offices offer SCSS. In case of demise of the account holder wherein the spouse is the sole nominee or joint account holder, then he/she can continue with the same SCSS account after informing the accounts office (at the bank or post office). 

Conclusion

Senior Citizen Savings Scheme is a government-backed scheme offering high security and tax saving benefits to the senior citizens who are generally 60 or above. Retired defense services personnel, except civilian employees, can open an account at the age of 50 (instead of 60+) if they meet the eligibility criteria. The terms and conditions for SCSS stay the same regardless of the bank or post office. The interest rate for SCSS is decided by the Government every quarter. SCSS offers one of the highest interest rates for senior citizens in the country.

Frequently Asked Questions (FAQs)

Q1. How can a senior citizen open up Senior Citizen Savings Scheme (SCSS) account online?

A. No, there is currently no facility available for SCSS’ online applications. If you are interested in opening up SCSS account, you need to visit the post office or bank branch and fill up the SCSS application form there. The same form has to be attached with the necessary documents such as KYC documents, ID proof, residence proof, age proof, and a deposit cheque.

Q2. What are the implications of SCSS?

A. Any investment made in the form of SCSS account is also eligible for tax deduction. The principal amount deposited in SCSS is eligible for a tax deduction of up to Rs 1.5 lakhs p.a. as per the Section 80C of the Income Tax Act of 1961. The interest offered on the SCSS is taxable as per the tax slab applicable to that person. Tax Deduction at Source (TDS) is applicable in case the interest amount earned exceeds Rs. 50,000 for a fiscal year.

Q3. Is there any penalty for premature closure of SCSS account?

A. Anyone with an SCSS account has the option of withdrawing their deposit or premature account closure anytime after they have opened their account but in such a case, a penalty is applicable. As per the latest rules of the government, a penalty of 1% would be deducted from the total deposit amount in case the SCSS account is closed before the expiry of 1 year of the investment.

Q4. What is the eligibility criteria for opening up a joint senior citizen savings account?

A. While opening up a joint account under the Senior Citizens Savings Scheme, the age of the first depositor must be 60 years or above. However, no age limit is set for the second applicant. The joint account can only be opened with the spouse but the entire amount in the joint account is attributed to the first account holder only.

Q5. Can anyone open up a joint SCSS account with any member of the family?

A. No, the joint account under the SCSS scheme can only be opened with the spouse wherein the maximum investment amount is Rs. 30 lakhs (in multiples of Rs. 1,000).

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