Senior Citizens Savings Scheme (SCSS) is a government-backed savings instrument offered to Indian residents aged over 60 years. The deposit matures after 5 years from the date of account opening but can be extended once by an additional 3 years. The SCSS interest rate for January to March 2020 has been set at 8.6%. This is the highest interest rate among the various small savings schemes in India. SCSS is available through Public / Private sector banks and India Post Offices. Being a government-backed savings instrument, the terms and conditions applicable to the SCSS are the same, regardless of the bank/ post office you invest through.
Senior Citizens Savings Scheme Interest Rates
As of January 2020, the interest rate available on the SCSS account is 8.6% per annum for the final quarter of the financial year 2019-2020 (January to March). This rate of interest is reviewed quarterly by the Ministry of Finance and subject to periodic change. Interest on SCSS account deposits is calculated and credited quarterly. The following are the historic interest rates of the SCSS account.
|Time Period||Interest Rate (% annually)|
|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|
Data Source: National Savings Institute
Minimum and Maximum SCSS Deposit Limits
Depositors are allowed to make a lump sum deposit with a minimum deposit of Rs.1000. Deposits greater than Rs.1000 have to be made in multiples of Rs.1000. The maximum SCSS limit deposit is Rs.15 lakh.
While deposits in the SCSS accounts can be made in cash, this is allowed only for amounts less than Rs. 1 lakh. If the deposit amount for Senior Citizens Savings Scheme exceeds Rs. 1 lakh, using a cheque/demand draft for making the deposit is mandatory.
Maturity of Senior Citizen’s Savings Scheme
Deposits made into a Senior Citizens’ Savings Scheme mature after 5 years calculated from the date of account opening. However, the account holder does have the option of extending the account for an additional 3 years after it has matured. This extension option is currently available just once and the extension request has to be made within 1 year of maturity of the SCSS account.
Eligibility for Senior Citizens Saving Schemes
In order to avail this saving scheme for senior citizens, resident Indians have to meet the following key conditions:
- The scheme is available to any resident individual aged 60 years and above.
- Also, individuals who have attained 55 years but are less than sixty years old are also eligible to apply for the senior citizens savings scheme provided they have retired under applicable superannuation or VRS rules. In such cases, the account should be open within 1 month of the receipt of retirement benefits.
- The scheme is also available for the retired defense personnel irrespective of above mentioned age limits subject to fulfillment of other terms & conditions.
- Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) are not entitled to open a Senior Citizens Savings Scheme account.
- Also, Hindu Undivided Family members are not entitled to open the account under these rules.
Taxability on Senior Citizens Savings Scheme
- Investments made in a Senior Citizen Savings Scheme account qualify for income tax deduction benefit up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act, 1961.
- Interest on SCSS is fully taxable. In case the interest amount earned is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.
Senior Citizen Saving Scheme vs Fixed Deposit
|Features||SCSS||FD (Tax Saver)|
|Interest Rate||8.60% (Jan-Mar)||6.5%-8.45% (For Senior Citizens)|
|Maturity Period||5 Year||5 Year|
|Tax Benefits (On Investment)||Yes||Yes|
|Tax Benefits (On Returns)||Taxable||Taxable|
|Premature Withdrawal||Allowed after 1 Year (Charged 1.5%)||Not Allowed|
Senior Citizens Savings Scheme Calculation Method
Deposits made into a Senior Citizens Savings Scheme account are compounded and paid out annually. These payouts are automatically credited to the savings account held with the post office/bank where this savings scheme account for senior citizens has been opened.
The interest rate on SCSS is currently 8.6% (as of Q4 FY 19-20). Assuming that you have deposited Rs. 15 lakh (the maximum amount permitted) in SCSS, the maturity value at the end of the 5-year tenure will be (15,00,000*1.086)^5 = Rs 22.65 lakh).
How to Open a SCSS Account at Post Office
You can open a Senior Citizens Savings Scheme account at all India Post Offices. The interest earned from SCSS account is automatically credited to the investor’s linked savings account at the same post office. The wide reach of India Post ensures that the option of SCSS account is available to Indians across the country- even those located in the most remote parts.
SCSS Account Registration at Banks
Apart from the post offices, the SCSS account is also offered at select Public/ Private sector banks. The following are key benefits of opening a Senior Citizen’s Savings Scheme account at authorized banks:
- The accrued interest can be directly credited into the depositor’s savings bank account held with the bank branch.
- Standard account statements are forwarded to depositors through post or email.
- 24×7 customer service through phone banking services.
In case you are a senior citizen and plan to complete your SCSS registration at a bank, you will have to follow the applicable account opening procedure.
SCSS Application Form Download Online
Senior Citizen’s Application Form is available via the offline route at India Post Offices as well as via the online route. If you are planning to open your SCSS account at an India Post Office, you can download the SCSS application form from the official India Post website.
A number of participating public and private sector banks also have the option of SCSS Application form download from their official websites. Alternatively, you may choose to obtain the paper form at designated branches of participating banks in India.
How to Fill Senior Citizen’s Savings Scheme Application Form
Currently, a SCSS account cannot be opened via the online route, thus after downloading the SCSS application form, you have to print, fill it out and submit the completed SCSS Application form (at the post office/bank) along with applicable supporting documents. The SCSS application form requires you to provide some key information at the time of opening a Senior Citizen’s Savings Scheme account such as:
- Applicant name and PAN
- Name of the primary applicant’s father/mother/husband/wife
- In the case of joint SCSS account with spouse, you have to mention the name, age, and address of your spouse.
- Cheque/demand draft amount and number (if applicable)
- Nominee name, age, and address (If you wish to have more than one nominee, mention detail of individual share of each nominee)
List of Banks offering SCSS Account
The following is a list of top public sector banks offering the facility of opening a Senior Citizen’s Savings Scheme account –
- Allahabad Bank
- Andhra bank
- State Bank of India
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- United Bank of India
A leading private sector bank that offers this account to senior citizens is ICICI Bank. The above list is illustrative and additional banks not included in this list may also offer this scheme.
Premature Withdrawal of SCSS Account Deposit
Premature withdrawal of Senior Citizen’s Savings Scheme is allowed but penalties are applicable in such cases based on the time elapsed between account opening and withdrawal. The penalties on premature exit from SCSS are as follows:
- 1.5% of deposit amount deducted as a penalty if an exit from the scheme occurs before completion of 2 years from the date of account opening.
- 1% of SCSS deposit deducted as a penalty if an exit from the scheme occurs between 2 years to less than 5 years from the date of account opening
Benefits of Investing in Senior Citizen Savings Scheme
- Being a government-backed scheme, SCSS comes with all the protection and assertion associated with all government schemes i.e. sovereign debt.
- Superior Returns- the scheme has a high interest rate of 8.6% per annum. This is higher than most tax savings instruments in Sector 80C.
- Medium Term Investment – The account comes with an initial maturity term of 5 years however this can be further extended to another 3 years. This encourages senior citizens to have this saving scheme as a medium or a long term investment product in their financial kitty.
- The investment done under this scheme is tax-deductible under Section 80C, of the Income Tax Act, 1961 up to Rs. 1.5 lakh per annum.
- Flexibility in Investment amount – One can invest any amount in multiples of Rs. 1,000 up to the maximum cap of Rs. 15 lakhs. However, only one time lump sum investments are allowed.
- The option of premature withdrawal in case of financial emergencies (with applicable penalties).
- Easy availability – the scheme may be availed through India Post Offices or designated bank branches located across the country.
Closure of SCSS Account before Maturity
In the event of death of the primary account holder before actual maturity of the account, the account will be closed and all the maturity proceeds will be transferred to the legal heir/nominee. For deceased claims, the nominee or the legal heir will have to fill out a written application in prescribed format along with Death Certificate to facilitate the closure of the account.
Q1.How can I open a senior citizen savings schemes account online?
Ans. In order to open a SCSS account, the customer must visit the post office or bank branch and fill up the related form. The same form should be attached with KYC documents, age proof, ID proof, Address proof and cheque for deposit amount.
Q2.IS 80C applicable on senior citizen savings schemes?
Ans. Yes, investments made in SCSS are eligible for income tax deduction benefits under the Section 80C of Income Tax Act, 1961.
Q3.Can I open a senior citizen saving account with SBI Bank?
Ans. Of course, any senior citizen can open a senior citizen savings account with banks such as the State Bank of India. However, according to SBI’s guidelines, a depositor can hold two or more SCSS accounts only if the deposits in all accounts taken together do not exceed Rs.15 lakh.
Q4.What is the maximum age of senior citizen saving account opening?
Ans. Any individual, above the age of 60, can open a Senior citizen savings account accompanied by all the required documents.
Q5.Can anyone open joint SCSS account with any family member?
Ans. A joint SCSS account can be opened by investing maximum Rs.15 lakh (in the multiples of Rs.1000) only with the spouse.
Q6.What is the eligibility criteria of joint senior citizen saving account?
Ans. While opening a joint SCSS account, the age of first depositor is supposed to be above 60 years. However, there is no age limit for the second applicant. The joint account can be opened only with the spouse.