Senior Citizen Savings Scheme

What is Senior Citizen Savings Scheme?

In 2004, the Government of India launched the Senior Citizen Savings Scheme (SCSS). It was introduced to ensure than the senior citizens were provided with guaranteed returns. This scheme ensures that the senior citizens have a regular income stream during retirement. It is a great way of honoring the elders who have spent their youth working hard.

Eligibility

• Any Indian citizen aged 60 and above can invest in SCSS.
• Citizens between the age of 55 and 56 who opted for voluntary retirement scheme (VRS) or superannuation are also eligible provided they invest within a month of receiving retirement benefits.
• Irrespective of their age, retired defense personnel excluding civilian defense personnel can also invest in SCSS.
• Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible to invest in this scheme.

How it Works

• The account can be opened in any post office, public sector banks and select private sector banks.
• Individual as well as joint accounts with spouse can be chosen.
• The current rate of interest is 8.4%.
• The interest rate at which one buys the SCSS is fixed until maturity.
• The interest is paid quarterly.
• One deposit per account is permissible.
• The minimum deposit amount is Rs 1000 and the maximum is Rs 15 lakhs.
• Deposits are to be made in multiples of Rs 1000 only.
• If SCSS is extended after maturity, the interest rate is revised to new prevailing rate on the date of extension.

Maturity and Withdrawal

• The period of maturity is 5 years.
• After maturity, extension of SCSS is allowed for 3 more years.
• Premature withdrawal is allowed only after a year.
• In case of premature withdrawal after a year but before completion of 2 years, 1.5 % of the deposit is charged as penalty. After 2 years, 1% is charged as penalty.
• In case of death of depositor, no penalty charges are levied.

Advantages

• Investments made under SCSS qualify for benefits of Section 80C of the Income Tax Act.
• The option of transferring accounts from one post office to another is possible.
• The facility of nomination is also available.
• There is no limit to the number of accounts an investor can own.

Limitations

• The investment limit is capped at 15 lakhs.
• Multiple deposits aren’t allowed.
• The rate of interest remains the same throughout the tenure of investment.
• Interest earned on the investments on SCSS is fully taxable.
• Penalty needs to be paid in case of premature withdrawal.

As an investment and savings instrument introduced for the senior citizens of the country, SCSS just has everything that is required for them. The fact that it is a Government of India sponsored instrument makes it even more reliable. Ease of application, tax benefits, guaranteed high returns are just a few of the many perks that SCSS embodies.