Senior Citizens Savings Scheme (SCSS) is a government backed savings instrument offered to those above the age of 60. It has a tenure of 5 years which can be extended by another 3 years. The SCSS interest rate is fixed throughout its tenure but it is revised every quarter (the new rate applies to fresh SCSS deposits). The SCSS rate for October-December 2018 has been set at 8.7%. SCSS is available through Public / Private sector banks and India Post Offices. Being a government savings instrument, the terms and conditions of the SCSS are the same, regardless of the bank/ post office you invest through.
SCSS Deposit Limits
The depositors are allowed to make deposits only once a year in a lump sum and it should be in multiple of 1,000 with maximum annual limit of Rs.15 lakhs.
Benefits of Senior Citizen Savings Scheme
- Being a government-backed scheme, SCSS comes with all the protection and assertion associated with all government schemes.
- Superior Returns- the scheme has an exceptionally high interest rate of 8.7% per annum.
- The account comes with 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. This however can be done only once.
- In the event of any financial compulsion, the account holder can prematurely close the account after a minimum term of one year. This however attracts a premature penalty of 1.5% of the funds till 2nd year of completion and post 2 years till the 5th year the penalty would be 1 % of the maturity value. However in case of renewal post completion of the initial term of 5 years, no premature penalty is levied for any withdrawal of funds.
- The account opening documents required to avail the SCSS are minimal and offer a relatively hassle-free experience to senior citizens. The major requirements are age-cum ID proof which could be Passport, Voter’s ID, Birth Certificate, Aadhaar Card, PAN card etc.
Eligibility for Senior Citizens Saving Schemes
In order to avail the saving schemes for resident Indians the following conditions need to be met.
- The scheme is available to any resident individual aged 60 years and above.
- Also individuals who have attained 55 years but are still less than sixty years are also eligible to apply for the senior citizens savings scheme, provided they have retired as per superannuation or VRS. 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 however subject to fulfillment of other terms & conditions.
- Non Resident Indians are not entitled to open the account under this Scheme.
- Also Hindu Undivided Family members are not entitled to open the account under these rules.
Other Terms & Conditions of SCSS
SCSS Interest Rate
The current interest rate offered on the senior citizen savings schemes is 8.7% per annum. The interest rate applicable when an SCSS deposit is made, applies for the entire tenure of the SCSS account. However the rate is revised every quarter which means that fresh SCSS deposits may have a higher or lower rate. The SCSS interest rate is typically higher than prevailing FD rates.
- The investments made in a Senior Citizen Savings Scheme account are entitled for income tax deduction under Section 80C of the Indian Income Tax Act, year 1961.
- Interest on the SCSS is taxable. In case the interest amount earned is more than Rs. 10,000, Tax Deducted at Source (TDS) shall be applicable to the interest earned.
The interest rate on the SCSS is currently 8.7%. Assume that you have deposited Rs 15 lakh (the maximum amount permitted) in the SCSS. Your maturity value at the end of a 5 year tenure will be (15,00,000*1.087^5 = Rs 22.76 lakh).
How to open SCSS Accounts
The SCSS is offered at all the Post Offices. The interest earned from the SCSS account is credited to a savings account which is created in the same postal office.
Apart from the post offices, the SCSS account is also offered at select Public/ Private sector banks.
This has the following benefits:
- 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 depositor through post or email.
- 24 by 7 customer service through phone banking services.
The following is list of banks where one can open a SCSS Account. The list is not exhaustive and is growing larger with more banks offering SCSS with the passage of time.
You have to mention your name, PAN number and your father’s/mother’s/husband’s/wife’s name and whether you are a resident of India. If you are opening a joint SCSS account with your spouse, you have to mention the name, age and address of your spouse. If you are opening the account through a cheque or demand draft, you have to mention the number of the cheque/demand draft. If you wish to have a nominee for the account, you have to mention the name, age and address of the nominee. If you wish to have more than one nominee, mention the shares of each nominee. You can find there SCSS form here.
Public Sector Banks:
- Allahabad Bank
- Andhra bank
- State Bank of India
- State Bank of Mysore
- State Bank of Bikaner and Jaipur
- State Bank of Patiala
- State Bank of Travancore
- State Bank of Hyderabad
- 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
Private Sector Bank: ICICI Bank Ltd.
Other Important Terms and Conditions
- The deposit in the SCSS accounts can be done in cash, if the deposit amount is less than Rs. 1 lakh.
- If the deposit amount is more than Rs. 1 lakh, it can be done by cheque or DD drawn in favor of the account holder and endorsed in favor of the deposit office.
- The depositor can be extended for a further period of 3 years post the maturity period of 5 years. The account holder is required to submit an application in form within a period of one year post the date of the maturity period.
- The depositor may have one or more nominees when opening the account or even after opening the account.
- In the event of death of the depositor before actual maturity of the account, the account will be closed and all the maturity proceeds will be refunded to the legal heir/nominee. For deceased claims, the nominee or the legal heir will have to provide a written application in prescribed format along with Death Certificate to facilitate withdrawal.